fstruthers
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that don't involve moving abroad..??
any ways to avoid cgt on buy to lets
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liteweight
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It doesn't work like that at all. If you sell your PPR there is no stamp duty clawback as long as you actually lived there, i.e. it was not rented. If you move in to your buy to let (usually much smaller property) and declare it as your PPR, capital gains tax will still arise on the sale, for the amount of time the property was rented.
Cheers!
How about if you have a brand new investment that was never rented.
You pay your stamp liability on your PPR which was bought years ago and has a low STamp and move into the new property.
Sell the new property immediately as a PPR without ever renting it and then move back to the original.
Obviously no actual moving may occur if possible.
How about if you have a brand new investment that was never rented.
You pay your stamp liability on your PPR which was bought years ago and has a low STamp and move into the new property.
Sell the new property immediately as a PPR without ever renting it and then move back to the original.
Obviously no actual moving may occur if possible.
liteweight
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Well you would have had to pay investor's rates of stamp duty when purchasing the property. These are higher than owner occupier rates. You'd have to keep the property empty while you sold your PPR and presumably would still be paying a mortgage..again at investor's rate. This just doesn't make financial sense.
If you bought the property years ago, why would you need to pay stamp duty? There is nothing other than legal and estate agents fees to be paid on the sale of a PPR. I assume therefore, that you mean, if you bought the PPR less than 5 years ago, you'd have to pay stamp duty clawback? The clawback would be at investors rates as you can't have 2 PPRs on the go at one time.
You're talking about keeping two properties on the go without any rental coming in. What you're suggesting is feasible but not practical IMO.
Of course you could rent out the first PPR for approx. a year before sale and still pay no capital gains tax. You'd have to live in the investment property. Better to crunch the numbers. You could end up paying fees, charges, stamp duty clawback and possibly capital gains!
The capital gains tax at 20% of profit after allowable deductable expenses might well be the cheaper option!
Thaks LW but I think I need to explain better:
How about the actual scenario:
Prop 1 is 1yr old and it is my PPR
Prop 2 is not ready yet and I wish to sell it on completion. This is a back up plan if flipping fails for any reason.
If I want to consider prop 2 as my PPR I would have to pay stamp claw back on P1 which I bought as FTB and declare P2 as my new PPR
When I pay the clawback prior to closing P2 I am enttilted to move into P2 as an OO. Once in
Thus selling P2 with no CGT or Initiall stamp.
The sense in this is:
1.At some point prior to 5 years P1 will be rented any way.
2.The stamp on P1 is much lower than P2 so rather pay this.
3.Selling P2 as an OO allows this be done CGT free.
How about the actual scenario:
Prop 1 is 1yr old and it is my PPR
Prop 2 is not ready yet and I wish to sell it on completion. This is a back up plan if flipping fails for any reason.
If I want to consider prop 2 as my PPR I would have to pay stamp claw back on P1 which I bought as FTB and declare P2 as my new PPR
When I pay the clawback prior to closing P2 I am enttilted to move into P2 as an OO. Once in
Thus selling P2 with no CGT or Initiall stamp.
The sense in this is:
1.At some point prior to 5 years P1 will be rented any way.
2.The stamp on P1 is much lower than P2 so rather pay this.
3.Selling P2 as an OO allows this be done CGT free.
You'd need to be careful doing something like this at it would look very suspicious to revenue. They might ask for proof that P2 is actually your PPR (more than just declared a PPR).
Also, you're not really avoiding CGT. You're basically just passing it on to P1 which would become categorized as an investment property (which as you stated you were planning on renting out anyway, so probably doesn't make a great difference).
Note that if P2 is not completed/sold before the budget in December you might be faced with a whole different system of Stamp Dutys and CGT rules.
Periods where your property was not held as your PPR (i.e. you were not living there) would not be exempt from CGT.
My understanding is that you should pay CGT based on the percentage of time where it was not your PPR. Say you lived in it for 1 year, rented it out for 1 year and then sold, you would be liable for CGT on half of the gain during those 2 years of ownership.
EDIT: You're actually given a years grace to sell your property so the scenario I gave above would mean you're not liable for CGT. If you moved back in, rather than sell it, then you would be liable for CGT.
There is a booklet about CGT from the Revenue here. http://www.revenue.ie/leaflets/cgt1.pdf
If you're contemplating doing something like this, I highly suggest getting in touch with a professional. It could turn out to be a very costly mistake should you misinterpret Revenue's understanding of these rules.
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Yes of course I would move back in after P2 closes. So my PPR clearly
Thanks
Full advice will be taken closer to the time.
Ihave heard many a times tax advice is the best money some people have ever spent.