Capital Gains Tax - Selling a site

[daveg]

Hi folks,

We bought a site last year and had planned on building our house. However circumstances have changed and we are now applying for a visa for Australia to emmegrate.

We have now put the site on the market. I understand whatever profit we make on the site will be subject to CGT (isn't it 20%?). However what about our expenses incurred during the purchase and sale of the site? We will have had to pay solicitors (twice for purchase and sale), auctioneer (for sale) and most importantly architect fees and planning fees. Can we claim these as expenses?

TIA.

 

[bazermc]

Hi Daveg

You may deduct from the consideration received from the sale of the site any cost incidential to the sale/disposal being solicitor fees, advertising, valautions auctioneers fees etc...

In relation to allowable costs of aquisition these again must be incidential to the acquisition of the site and would include again legal fees cost of conveyance including stamp duty if any paid.

Have you made any chnages to the site eg building work, did you obtain planning permission during the period of ownership this could affect the computation of the taxable gain

have you any capital losses brought forward
was the site in joint name with a partner if so you can avail of the double annual exemption of €2,540

 

[daveg]

Hi Daveg

You may deduct from the consideration received from the sale of the site any cost incidential to the sale/disposal being solicitor fees, advertising, valautions auctioneers fees etc...

In relation to allowable costs of aquisition these again must be incidential to the acquisition of the site and would include again legal fees cost of conveyance including stamp duty if any paid.

Have you made any chnages to the site eg building work, did you obtain planning permission during the period of ownership this could affect the computation of the taxable gain

have you any capital losses brought forward
was the site in joint name with a partner if so you can avail of the double annual exemption of €2,540

Thanks for the reply bazermc.

Hi Daveg

You may deduct from the consideration received from the sale of the site any cost incidential to the sale/disposal being solicitor fees, advertising, valautions auctioneers fees etc...

So CGT would be:

The final sale price of the site.
Minus
cost of site + expenses (legal, planning, architect, advertising, estate agents) + €2540 annual exemtion.

Figure remaining is subject to CGT.

In relation to allowable costs of aquisition these again must be incidential to the acquisition of the site and would include again legal fees cost of conveyance including stamp duty if any paid.

Sorry I don't understand. Do you mean that legal fee's, stamp duty etc paid when purchasing the site could be added to our cost of "expenses". I.e. would not be subject to CGT?

Have you made any chnages to the site eg building work, did you obtain planning permission during the period of ownership this could affect the computation of the taxable gain

Yes. We drew up plans and (sucessfully) recieved FPP.

have you any capital losses brought forward
was the site in joint name with a partner if so you can avail of the double annual exemption of €2,540

What are capital losses? The site is in joint name so we would qualify for the €2540 exemption.

 

[bazermc]

the cgt comp would look something like this

Sales price
Less cost of selling site legal fees, advertising etc..
Equals net proceeds received on sales

Less cost of acquisition
org cost of site
Stamp duty paid on purchase if any
legal fees on purchase etc...

Equals net gain
less annual exemption X2 if jointy owned
Equals taxable gain

CGT thereon at 20%

In relation to capital losses these are previous losses made on capital diposals of shares etc....had a gain arose they would of been subject to CGT for example a lot of people made a loss on the eircom shares.
If you have losses they have to be offset against the net gain above before using the annual exemption

also may be worth mentioning if you sell before 30th September 06 the cgt will be payable on or before 31 October 2006 the rules in relation to this changed a few years back so its a bit of a bummer having to pay cgt within a month thanks to minister for finance

does this make any sense

 

[daveg]

the cgt comp would look something like this

Sales price
Less cost of selling site legal fees, advertising etc..
Equals net proceeds received on sales

Less cost of acquisition
org cost of site
Stamp duty paid on purchase if any
legal fees on purchase etc...

Equals net gain
less annual exemption X2 if jointy owned
Equals taxable gain

CGT thereon at 20%

In relation to capital losses these are previous losses made on capital diposals of shares etc....had a gain arose they would of been subject to CGT for example a lot of people made a loss on the eircom shares.
If you have losses they have to be offset against the net gain above before using the annual exemption

also may be worth mentioning if you sell before 30th September 06 the cgt will be payable on or before 31 October 2006 the rules in relation to this changed a few years back so its a bit of a bummer having to pay cgt within a month thanks to minister for finance

does this make any sense

Perfect. There was no loss. Bought site for 70K. Selling for circ 130K. Therefore approx calculations:

Site 70K
Stamp Duty @ 5% = 3500
Solicitor fees = 1500 approx
Architect fees + planning fees = 5K approx
Estate agent selling fees = 1.5% = 2K approx
annual exemption X2 = E2540

Total = E84540
Site sale (approx) = 130K

20% of profit = 45,460 = E9K

 

[asdfg]

Don't forget to include the full invoice amount from solicitors, estate agents etc including VAT