Capital Gains Tax and Stampy Duty query

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Lindy

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Hi everyone, I have an apartment which I bought to live in. I chose to rent it out after a few months so it has been rented for 2 years of the last 2.5 years I have owned it. I am looking to sell now as I do not want to live in it anymore and am hoping to buy somewhere closer to my family.

The apartment was bought for 207k, currently selling for 325k.

As I did not pay stamp duty when I bought it what is total amount of claw back I have to pay now?

How would I work out capital gains tax I need to pay? Is it - profit 118k * 20% = 23,600k?

The next place I buy I understand I need to pay stamp duty. Does this mean I have to pay stamp duty I should have paid when I bought the first place, capital gains tax on profit made and more stamp duty on new place? This all seems a bit much when all I want to do is buy another place that would be more suitable to live in by myself!!!

Would it matter if I bought another place straight away and there was no break in owning a place?

Any help much appreciated
Thanks
 
Lindy said:
I have an apartment which I bought to live in. I chose to rent it out after a few months so it has been rented for 2 years of the last 2.5 years I have owned it. I am looking to sell now as I do not want to live in it anymore and am hoping to buy somewhere closer to my family.

The apartment was bought for 207k, currently selling for 325k.

As I did not pay stamp duty when I bought it what is total amount of claw back I have to pay now?
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Current investor SD on that purchase would be 4% or €8,280. I think that this was the same rate that applied a couple of years ago but check with Revenue to be sure. The SD clawback was due at the time that you first rented it so is overdue now and may be subject to interest and penalties. You should consult with a tax advisor on this matter before you submit a late return/payment.
How would I work out capital gains tax I need to pay? Is it - profit 118k * 20% = 23,600k?
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Roughly although you will get some relief for the time that the property was (?) your PPR and you can deduct allowable acquisition/disposal expenses and your annual CGT allowance of €1,270. Again you should check the Revenue website for details of CGT calculations and consult with an accountant/tax advisor.

If you were not paying income tax on rental income along the way then this matter still remains unresolved. Similarly if you were claiming owner occupier mortgage interest tax relief while not an owner occupier then you need to repay this although 100% of mortgage interest can be written off against rental income by investors.
The next place I buy I understand I need to pay stamp duty.
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Not necessarily. Owner occupiers (FTB or not) are exempt from SD on the purchase of new properties under 125 sqm.
Does this mean I have to pay stamp duty I should have paid when I bought the first place, capital gains tax on profit made and more stamp duty on new place?
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Yes to the first two. Maybe to the third.
This all seems a bit much when all I want to do is buy another place that would be more suitable to live in by myself!!!
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Then buy a new property - no SD.
Would it matter if I bought another place straight away and there was no break in owning a place?
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Not sure what you mean.
 
The next place I buy I understand I need to pay stamp duty. Does this mean I have to pay stamp duty I should have paid when I bought the first place, capital gains tax on profit made and more stamp duty on new place? This all seems a bit much when all I want to do is buy another place that would be more suitable to live in by myself!!!

Answers: Yes, Yes and Yes unfortunately
 
HighFlier said:
The next place I buy I understand I need to pay stamp duty. Does this mean I have to pay stamp duty I should have paid when I bought the first place, capital gains tax on profit made and more stamp duty on new place? This all seems a bit much when all I want to do is buy another place that would be more suitable to live in by myself!!!

Answers: Yes, Yes and Yes unfortunately
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No - the answer is "maybe" to the question of whether or not SD will be payable on the next PPR purchase. It will not be if the property is new and under 125sqm.
 
Re: Capital Gains Tax and Stamp Duty query

Thanks for the quick responses. I forgot about the no stamp duty for new places. I have been on the look out for these but they are few and far between in Castleknock!!! The thoughts of spending so much money on capital gains tax etc and then another big chunk on stamp duty feels so unfair but such is life!!
 
Life is full of trade offs. Extending your search to areas in which there are new properties may be one of them versus paying SD on a second hand property may be one of them.

Do you also have an outstanding tax liability on rental income?
 
Lindy said:
Hi everyone, I have an apartment which I bought to live in. I chose to rent it out after a few months so it has been rented for 2 years of the last 2.5 years I have owned it. I am looking to sell now as I do not want to live in it anymore and am hoping to buy somewhere closer to my family.
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You lived there for the entire period?

I am assuming you weren't availing of the Rent a Room scheme? If you were you wouldn't have any liability for stamp, tax on rental income, or cgt upon selling.
 
Good point. I was assuming that this was a non rent a room rental situation but on reviewing the original post it's certainly not clear. If you were living there while renting out rooms and the annual rent was less than €7,620 then the rental income tax, SD and CGT issues do not apply after all!
 
Re: Capital Gains Tax and Stamp Duty query

Sorry I wasn't clear. No I didn't live there when it was rented out..in hindsight this would of been the best option but at the time it was not something I even considered.
 
i bought a second house for 180,000euros,in 2002,of which 100,000euros was a mortgage,i am now selling it for 315,000euros,this leaves a paper profit of 135,000euros.i did not have tax relief on the morgage,and also had to build a driveway[a new bungalow],and put down some flooring,could someone tell me if any of these costs can be deducted from any profit made before cgt is applied?p.s. also is indexation[inflation]allowed on the house bought in 2002.regards hopalong
 
hopalong said:
i did not have tax relief on the morgage
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You mean owner occupier mortgage interest tax relief? Were you writing interest off against rental income when filing your returns?
and also had to build a driveway[a new bungalow],and put down some flooring,could someone tell me if any of these costs can be deducted from any profit made before cgt is applied?
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You need to check if either or both of these can be considered capital expenditure and, as such, can be written off against CGT. I suspect that the driveway might be considered an enhancement of the property iteslf but the flooring might be considered fixtures/fittings and, as such, perhaps qualifying for depreciation written off against rental income. I think...
p.s. also is indexation[inflation]allowed on the house bought in 2002.regards hopalong
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CGT indexation is not available after 2002 or 2003 (can't remember the exact date) so if any indexation relief is available it will be minimal.

You really should get independent, professional advice when assessing your CGT liability and making a return.
 
no the house was not rented out.so cost €180,000,sell €315,000,leaves €135,000 less borrowings[mortgage]€100,000=€35,000@20%.or €135,000 less interest payed on mortgage €30,000 approx=€100,000@20%.are any of these sums right,regards hopalong
 
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hopalong said:
no the house was not rented out.so cost €180,000,sell €315,000,leaves €135,000 less borrowings[mortgage]€100,000=€35,000@20%.or €135,000 less interest payed on mortgage €30,000 approx=€100,000@20%.are any of these sums right,regards hopalong
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No, they are completely wrong. You can't offset your interest payments/mortgage against your capital gain. You can only offset your interest payments against your rental income.

Your CGT liability is 20% of (135K - allowable deductions).

Talk to an accountant before you make a big mistake.
 
How would I work out capital gains tax I need to pay? Is it - profit 118k * 20% = 23,600k?
The last 12 months in your apartment will be deemed to be occupied by yourself, so any gain that you make will be reduced by three fifths i.e. you will have occupied the apartment for 1.5 out of 2.5 years.
 
Re: Capital Gains Tax and Stamp Duty query

Thanks Liamos, paying 14,160 in cgt sounds a lot less painful than 23,600!

In relation to CGT and Stamp Duty Clawback, how do you go about paying them? Do you get forms from the Revenue website and fill out and attach a cheque? The apartment is going on the market shortly so will need to get my head around what to do when it is eventually sold.
 
Lots of info on the Revenue website - e.g. about CGT [broken link removed]. Not sure about the mechanics of paying the SD clawback. Probably best to contact Revenue. Also - you should really be getting independent professional advice on assessing your liabilities and making your returns.
 
could someone tell me if i have my investment house sold today 22nd sept,i pay my cgt at 20%,when exactly do i pay it?on the revenue site it says in the notes on cgt "you are obliged to make return before 31st oct in the year following the tax year in which the disposal is made.e.g 2004 disposed of,must be returned by 31st oct 2005".but in later notes it gives payment dates for payments,"disposals between jan and sept 2005,are due to be payed by 31st oct 2005".
 
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hopalong said:
could someone tell me if i have my investment house sold today 22nd oct,i pay my cgt at 20%,when exactly do i pay it?on the revenue site it says in the notes on cgt "you are obliged to make return before 31st oct in the year following the tax year in which the disposal is made.e.g 2004 disposed of,must be returned by 31st oct 2005".but in later notes it gives payment dates for payments,"disposals between jan and sept 2005,are due to be payed by 31st oct 2005".
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If you sell you investment property on the 22nd October next, the CGT payment is due on 31st January 2007 and the Return is due 31st October 2007.

The tax year is divided in two periods for Capital Gains Tax payment purposes. "Initial period" - 1st January to 30th September and "later period" - 1st October to 31st December.

Here's the CGT payment payslip for disposals in the period 1st October 2006 to 31st October 2006. The "initial period."

[broken link removed]

If you sell your investment property before 30th September 2006, the CGT payment is due on 31st October 2006 and the Return is due 31st October 2007.

Here's the CGT payment payslip for disposals in the period 1st January 2006 to 30th September 2006. The "later period."

[broken link removed]

The CGT Return form for disposals during 2006 is not available yet as the Return is not due until 31st October 2007. But here's the current one (for disposals during 2005 and Return due on 31st October 2006.

http://www.revenue.ie/forms/cg1_05.pdf

If registered on ROS (Revenue's Online Service) for CGT and Income Tax you can do this all online.
 
so, i must pay my cgt by 31st oct2006,and must file a return by 31st oct 2007,thanks i had it back to front,regards
 
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