Capital Gains Tax

B

Big Jimmy

Guest
I am going to sell my house in the next few months as I have been offerred a job in the UK. The market is slow at the moment and worrying if I don't sell it and rent it out for a couple of years I would be required to pay CGT.

At the moment if I sell no CGT as it is my main residence if I keep it as a holiday home when I go to sell it say in 5 years would I need to pay CGT? My wife is Irish and would like to keep the house as she likes the area where the house is and means she would have a place in Ireland.

I don't want to keep it if it means I have to pay CGT when it is sold.
 
If you don't sell the property within 12 months of vacating it as your PPR (Principal Private Residence) then some portion of any eventual resale gain will be assessable for CGT. Renting it out or not and keeping it for 5 years (or whatever) has no bearing on this. There are several threads on this issue and how to calculate what the assessable portion of any gain would be depending on how long you owned the property overall and how long it was a PPR.

If you rent the property out within two years of purchase (was 5 years before Budget 2008) then a clawback of stamp duty applies. Is this the house in question? If so then it sounds like it was a recent purchase?

When renting out the property there are various other tax and other implications. See the Property Investment FAQ and key posts for more on these.
 
Yes the house was only purchased 3 years ago. I am moving to the Isle of Man where CGT does not apply, but in Ireland it does not matter where I am resident but on UK property I don't need to pay CGT.

I think I will just need to sell it as I can buy a property elsewhere and not have to pay CGT on the sale. Shame as would of liked to keep it as the mortgage not much and already have a house in the IOM.

The main issue is that I just don't want to pay CGT as a penalty to holding on to a house that we would only use 6 or 7 times a year when my wife visits her family.
 
I don't know about the cross jurisdictional tax issues. You should get professional advice on these.

Renting the property out post December 2007 will not trigger a stamp duty clawback if you bought it more than 2 years ago.

Remember that even if you don't sell within 12 months of moving out only some portion of the eventual resale gain will be assessable for CGT. For example if you lived in it for 3 years and then eventually sold it another 2 years later (i.e. you owned it for 5 years) then (2 - 1) / (3 + 2) = 1/5th of any overall gain (less the usual allowances etc.) would be assessable for CGT at 20%.
 
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