Capital Gains Tax V Capital Aquisitions Tax Query

J

Jimbob2

Guest
I have just inherited my mother's house jointly with my brother. I have been living in it with my mother for the past while.

We intend to hold on to the property for about a year and then sell.

I'm told that I will have to pay CGT when I sell in a year despite the fact that I'm living in it as my main residence. I'm told I can't designate it as my principal private residence as I did not live with my mother for 3 years prior to her death and I own other property.

Is that the case?

I thought that as I now co-own the property and I'm living in it as my main residence and will do until I sell it that I should be able to call it my principal private residence.

If I'm wrong it means I currently don't have a principal private residence as I rent the other property out.

Any thoughts?
 
Re: Cgt

If you do pay CGT I think that it will only be on the gain in value from the time you get ownership and the time you sell so do not undervalue it if it is below the limit.
The first thing that you should do is inform the Revenue that it is your PPR. This will increase your chances when the time comes.
 
Re: Cgt

When you sell a property, you are liable to capital gains on the difference between the sales proceeds and the acquisition cost, which can be indexed if acquired prior to 2003. In the case of an inheritence, the acquisition cost is the value on the date of inheritence, normally this is the date of death. It is the value established during probate and will figure on the revenue affidavit and CAT forms.

However, you may claim relief from CGT for your Principal Private Residence (PPR relief) - this is calculated Period of Occupation/Period of Ownership - normally calculted in months.

The "Period of Ownership" is between the date of acquisition and the date of sale or disposal.

The "Period of Occupation" is the total time time you lived in the house as your principal residence - normally, you would have only one principal residence at any one time - plus certain periods which are deemed to be periods of occupation by the revenue even though you in fact lived elsewhere, subject to certain conditions. Thus the last 12 months of ownership are deemed to be 12 months of occupation. Also, if you live elsewhere in the state because of your employment, this period will be deemed a period of occupation, as long as you live in the house before and after this period of absence.

It is not clear how long you need to live in a house before it is deeemed to be your principal residence - obviously one month would be considered too short but 6 months might be OK - it would depend on the view taken by the revenue and not all revenue officers may take the same view.

The 3 year rule has nothing to do with CGT but is one of the conditions to be eligible for the Dwelling House Exemption for CAT purposes.
 

Based on what you say, the house will be your PPR and you can claim PPR relief and no CGT will be due
 
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