Capital Gains Deferral

My mother bought a property a few years ago as one of her parents was living there, it used to be the family home which was rented to them for years. The parent was also using adjoing property as a garden to pass away the time. This property was also purchased by my mother in the 70's. As time has passed so has her parents and the property is currently idle. The local authority last year wrote to my mother to enquire what she was going to do with it under the derilict buildings act. We are not too sure what to do with it so we are concidering selling it so that somebody can realize the potiental of it. We estimate the value to be around €1m as is.

Should my mother sell the two properties can she reinvest the money gained from selling it into a house or two and defer the capital gains tax or is this a waste of time?

Her plan at the moment would be to sell the properties and purchase two houses, one for myself and one for my sister and depending on the capital raised by the sale an investment house for herself.

Thanking you in advance for you help.

OBJ.

Should my mother sell the two properties can she reinvest the money gained from selling it into a house or two and defer the capital gains tax or is this a waste of time?

Click to expand...

She will have to pay CGT on the profit. It doesn't matter what she does with the proceeds. There used to be a tax deferral, but that's gone now.

The only way to avoid CGT is for your mother to leave the property to you on her death, as death is not a disposal for CGT purposes.

What age is your mother? What is her expected lifespan? What will the CGT bill be? Is it worth waiting to save that CGT?

Brendan

Hi Brendan,

My mam is nearly 63, hopefully shes sticking around for a while. The CGT will be about €190k-€250k we expect. We're going to sell it anyway probably but it would be nice to reinvest as it took a lot of work a long time ago to purcahse the property in the first place so it's dissapointing to be give so much away to a system that had nothing to do with the earning of it. Such it a tax system I suppose.

Thank you for your help.

obj