capital gains tax

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babygirl

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my father is signing over the old family home to me (my parents built a new house). the house was bought at £IR 8200 in 1989 and is now valued at valued at 45,000 euro.
when we had the capital gains tax calculated it would be over 6,000 euro!! how can it be this much?
how can £IR 8200 be only 13,004 euro after 20 years of inflation?

it was the family home form 1989 up untill 18months ago but that isnt taking into account! dose this seem right?
 
The CGT calculation goes like this :-

Original Cost £ 8,200 in 1989 is indexed up using the revenue table

If purchased before 6th April 1989, multiply by 1.553
If purchased on or after 6th April 1989, multiply by 1.503
Remember, the Govt cancelled the indexation in 2004. And the indexation had nothing to do with the real rate of inflation - it was just a mechanism to alleviate some of the inflation.

Assuming purchased after 6th April, restated cost = £ 8,200 x 1.503 = £ 12,324
Convert to euro = £ 12,324 / 0.787564 = € 15,648

Capital gain = 45,000 - 15,648 = € 29,532

Your parent will get relief for the portion of time the lived in the house as a PPR plus last 12 months - so that would seem to be about 20 years out of 21 ie 20/21 * 29532
so the relief would be about € 27,954 leaving a taxable gain of

29532 - 27954 = 1,578

Less annual CGT allowance of 1270 or twice that if house was owned jointly - not necessarily the case.

I don't know where you got the figure of 6,000 from but it's clearly wrong or else the amounts and/or dates you've given are different from the ones used to calculate the 6,000
 
i worked it out myself last night using that same formula jpd and i dont know how the solicitor got 6,000 euro. my father rang his friend who is an property auctioner and he said the 6,000 figure is right...??? he said he cant get the PPR relief, would this be because my father now owns 2 houses?
the solicitor said the inflation index is 1.3.
since my parents are giving me the house i want to pay all the costs but the 6,000 is a crazy amount. im a single mother with just part time work for xmas.
he is going to ring his accountant later about it.
 
Don't rely on your solicitor for advice on Capital Gains Tax. Don't rely on your accountant for advice on legal issues.
 
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