Capital Gains on PPR that will now become an Investment

A

ask73

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I was a 1st time buyer 7 years ago on my existing PPR
We are moving to a new home and will rent our old home
The Original cost wa €190,000 and it's now worth €405,000
How do we protect this gain without selling the house given the fact that house prices are now dropping and we may want to sell in a few years
 
If you don't dispose of a former PPR within 12 months of vacating it then some portion of the total gain will be assessable for CGT. For example if you rented the property for 4 years and then sold it you would have owned it for 11 years, for 7 years of which it was your PPR, 1 year of which is exempt from CGT and the remaining 3 of the 4 years during which it was rented determining how much CGT applies - i.e.

(4-1)/11 = c. 27% of any total capital gain would be assessable for CGT. Note that the capital gain from the time it was vacated to when it was sold is not relevant - it is the total capital gain since acquisition as your PPR which matters and a portion of this is assessable for tax.
 
I am in a similar position, but have received conflicting advice.

I bought house 10 years ago for 100k (incl stamp duty). It has been my main PPR since. It is now worth c.320k. We have gone sale agreed on another property.

I was told from one source that if I keep the house that I would have to pay CGT on the full amount since I first bought less allowances for indexation and renovations.
e.g. if indexation etc brought purchase price up to €170k, I would have to pay CGT of 30k when I sold once I rented. (320 - 170) = 150 @ 20% = €30k

Another souce gave the same information as you.
Assuming I sold in 5 years time and sale price was still 320 (again for calculation purposes), Scenario here would be (320 -100) = 220 *5/16*20% = €13,750.

Both sources were fairly adamant they were correct.

Please advise what is correct as this will help determine whether to keep the property for investment or whether to sell it.

Many Thanks
 
Mailman, Clubman and your first source were correct.

Tell the person who told you it would all be taxable to refer to section 604 of the Taxes Consolidation Act, 1997.
 
I would assume the person who gave the incorrect advice confused the situation regarding Stamp Duty and CGT.

Where SD is liable for clawback (in the old system, renting a PPR within 5 years of availing of FTB Owner Occoupier SD relief), it's an all or nothing scenario. CGT is treated differently and payable on the portion concerned (minus the possible final year relief) as mentioned above.
 
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