Capital Gains Tax

[moneyhoney]

I've owned my house for just over 7 years and I'm planning to take a career break for a year and do some travelling. So, plan to rent out the house to cover the mortgage when I'm gone. However, a friend told me that if I rent out the house & want to sell it in the future, I'll be liable for capital gains tax. Is this true?

 

[Graham_07]

CGT may apply but the materiality of the amount all depends on (a) how long you owned it, (b) how long it was your PPR ( Principal Private Residence) and (c) how long it was rented. So if you own a property for 10 years, live in it as your PPR for 9 years & rent it for 1 year you have residence of 9/10 of period of ownership. CGT is calculated on the gain on the property and then reduced to 1/10 of that sum. So the longer you live in it and the shorter its rented, the less an issue CGT is.

Bear in mind that if you rent it (a) TRS on the mortgage interest will not be allowable for that year (b) the interst will, instead be a deduction against the rent but only if the property is registered with the PRTB.

 

[webtax]

You could also try renting a spare room under the rent-a-room scheme for under the limit of €7,620. Search AAM for info on whether you would be covered by the scheme while abroad or get professional advice on this.