Capital Gains Tax Calculation Help Please!

P

powert

Guest
Hi

I hope that a more knowledgable person than me can look at this calculation and see if it makes sense. This is hypothetical as i need to know the viability of making a PPR an investment property in the near future and possibly selling it at a lager stage. The CPT is knew to me so apologies in advance for outrageous calculations!

Purchased House 2002: (240*1.049 = 251.76)
Sell 2010: 400K
Sales Cost: 8K
Capital Gain:
 
You'll need to give more detail here - such as when did it cease to be your PPR? Also, is that indexation figure running from 2002 to now or to 2010? I don't know on what figure you base the indexation calculation against if the asset changes from PPR to investment prop midway through ownership - Clubman is v good on this sort of stuff. I've seen that it really doesn't matter what the market value of the prop is at the date you change it to be an investment property, so p/haps indexation applies from the date of first purchase...

Sprite

EDIT - just saw that you are considering changing to investment prop "soon". In that case, ignoring indexation (purely for my own convenience!):

Purchased House 2002: 240k
Sell 2010: 400K
Changed to Investment Prop - 2008
Taxable Gain (before expenditure) = 25% of 160k (2/8ths of 160k due to time split as PPR and investment prop) = 40k
Sales Cost: 8K
CGT allowance = 1270
Capital Gain: 30,730
Tax - 20% of above
 
Last edited:
Capital Gains Tax Help Please

Hi

I hope that a more knowledgable person than me can look at this calculation and see if it makes sense. This is hypothetical as i need to know the viability of making a PPR an investment property in the near future and possibly selling it at a lager stage. The CGT is knew to me so apologies in advance for outrageous calculations!

Purchased House Sept 2002/ Indexed this : (240*1.049 = 251.76)
Sell 2010: 400K
Sales Cost: 8K
Capital Gain:149 approx
Capital Gain Adjusted for own occupency: 149/10*3 = 44.7
Less our Exceptions of 1,270 each: 42K
Chargeable Gain:42K
Tax 20%: 8,400

Is there anything i am missing here? Apologies i sent the earlier message in error without showing all figures. I know that you can deduct some enhancement type costs any idea what they would be?
Thanks in Advance for any advice.
 
You only occupied the house for 3 years? Also, what indexation are you applying - to 2008 or 2010?

Sprite
 
CGT indexation only applies up to c. 2003 anyway. After that the indexation multipliers have not been updated since indexation was abolished thereafter a few budgets back.
 
Glad you're here Clubman - I'm out of my depth here, as I quickly realised having edited my previous post about 8 times. OP, your occupancy rate looks slightly off as the period of property ownership is 8 years if you sell in 2010 so the CGT proportion should be a multiple of an eighth, not a tenth, but otherwise your calcs look good to me.

Sprite
 
Re: Capital Gains Tax Help Please

powert said:
Purchased House Sept 2002/ Indexed this : (240*1.049 = 251.76)
Sell 2010: 400K
Sales Cost: 8K
Capital Gain:149 approx
Capital Gain Adjusted for own occupency: 149/10*3 = 44.7
Click to expand...
This bit doesn't make sense to me. If you bought in 2002, rent it out now (?) and then sell in 2010 then it would be owned for 8 years, PPR for 6 years and rented for 2 years in which case (2-1)/8 = 1/8th = 12.5% of any total gain would be assessable for CGT.
Is there anything i am missing here? Apologies i sent the earlier message in error without showing all figures. I know that you can deduct some enhancement type costs any idea what they would be?
Thanks in Advance for any advice.
Click to expand...
Apart from that your rough calculations look about right but get professional advice if in doubt about anything.
 
WaterSprite said:
Glad you're here Clubman - I'm out of my depth here, as I quickly realised having edited my previous post about 8 times. OP, your occupancy rate looks slightly off as the period of property ownership is 8 years if you sell in 2010 so the CGT proportion should be a multiple of an eighth, not a tenth, but otherwise your calcs look good to me.
Click to expand...
The indexation was correct in the original poster's post as far as I can see. But I don't think that you are out of you depth since I basically agree with you above. Or maybe we are both equally out of our depths! :)

There may be some other specific costs that can be offset when calculating the CGT liability in detail but the general gist looks OK to me.
 
thanks for the help i see where i made the mistake re the 10 years - you are right it would be 8 years having the property in total. Thanks Again.
 
Sorry lads my thinking might not be the best today but my calculation goes:
Sale less costs 392,000
Indexed cost 251,760
Gain 140,240
Gain - year following cessation of PPR treated as PPR
therefore 1/8 17,530
Personal allow 2,540
Taxable 14,990
Tax 2,998

Not a lot really!!! As a deductible cost you can also factor in the cost of purchase, legal fees, stamp duty as well as any capital additions such as new garage, bedrooms, attic conversions, etc. You basically work out the profit then multiply this by the no of years not a PPR minus one extra year over the number of years of ownership less personal allowance multiplied by 20%. In my experience DIY CGT calculations nearly always get it wrong. They usually pay too much and don't factor in all their deductible costs.
 
Last edited:
simplyjoe said:
Personal allow 1,270
Click to expand...
There seem to be joint owners here so two annual CGT allowances should be available.

If applicable you can (must!) also offset any previously incurred capital losses (e.g. eircom shares perhaps?).

Once again, getting the rough idea of the calculations yourself is all well and good but it probably makes sense to get professional advice when doing the actual detailed calculations and return.
 
You must log in or register to reply here.
Back
Top