Capital gains tax on house sales

[John Lingua]

Hi, I own outright my current house. I’d like to sell this house and buy another bigger one to have more room for the family. Ideally, I’d move the family out to a rented house, sell the old/current house, and then buy a new one, and then all move into the new house. But considering the current rental market, and it being so hard and expensive getting a suitable rental place, I’m tempted to buy first, move the family, and then sell. I could manage it from a mortgage perspective (have mortgage approval to buy the second house) but am thinking that once I buy the new house, the second house is no longer my primary residence therefore I’d have to pay capital gains on its sale. The current house has appreciated 300K in value since I bought it in so I obviously want to avoid capital gains tax. I’d appreciate any advice. Thanks

 

[TomEdison]

First, even if your house does transition from being your principal private residence to not being, this doesn't mean that the entire gain is taxable on disposal. The gain is apportioned between the period it was your PPR and the period it wasn't.

Secondly, you get a twelve month grace period anywhere where you can treat the house as your PPR even though it had ceased to be.

So if you move out, and sell within the next 12 months, you treat the house as having been your PPR for the whole period of ownership, and no part of the gain is taxable.

 

[John Lingua]

Hi Tom, thanks a lot for your input. That's really useful. John

 

[Leesider32]

First, even if your house does transition from being your principal private residence to not being, this doesn't mean that the entire gain is taxable on disposal. The gain is apportioned between the period it was your PPR and the period it wasn't.

Secondly, you get a twelve month grace period anywhere where you can treat the house as your PPR even though it had ceased to be.

So if you move out, and sell within the next 12 months, you treat the house as having been your PPR for the whole period of ownership, and no part of the gain is taxable.

Hi Tom,

I am thinking of selling a property I have rented out. I have it since 2005 however it was my PPR for 4 years between then and now, so based on what you have said above would it be apportioned based on the length of time it was actually rented? Let's say the capital gains was €100k, hence €33k tax by normal calculation but due to the 4 years (or 1/5 of the time) having it as my PPR the tax payable would be approx €26,400?

Thanks

 

[Protocol]

It is the gain that is apportioned.

The CGT is not apportioned.

 

[TomEdison]

Protocol is correct, though the outcome is the same whichever way you do the calculation. Multiplication is commutative, or something like that, I seem to remember from Inter Cert maths.

 

[Leesider32]

Thanks for the responses, what kind of proof do you have to provide? It was from 2006 to 2010 that it was my PPR.

 

[TomEdison]

Thanks for the responses, what kind of proof do you have to provide? It was from 2006 to 2010 that it was my PPR.

I suppose you don't have a lot of 15-year old utility bills or bank statements lying around, do you?

You assess this yourself; you only have to evidence it if Revenue ask for that. They are not normally very suspicious about this, unless they have some reason to think it was not your PPR — their own records show they were corresponding with you at the time at a different address, or that you owned several properties, or that you were employed at the other end of the country, or something of the kind.

 

[Leo]

I suppose you don't have a lot of 15-year old utility bills or bank statements lying around, do you?

Never needed to avail of it myself, but I've heard some of the utilities are good at re-issuing old bills or at least confirming when someone was a customer for this purpose.