CGT and Principal Private Residence

[Petre]

I became resident (but not domiciled) in Ireland for tax purposes in 2005 where I rented accommodation. I rented out my house in the UK and then sold it when the tenants moved out (after only five months in the house). The house had been my principle private residence since October 1996 and was sold (at a profit) in April 2006. I understand that because I am non-domiciled and did not sell my house within one year of moving to Ireland I will be subject to capital gains tax on the profit. This raises several questions and I hope there's someone helpful out there with some answers:

1) Will I have to pay tax on all the capital gain (less expenses that can be used to offset the gain) which seems somewhat unfair, or will CGT apply only to the gain that can be attributed to the short period of time when the house was rented out and was thus not my PPR?

2. I have reason to believe (and can probably show) that during the period my house was rented out there was no capital gain which is one of the reasons I sold the property after the tenants moved out. Might this mitigate my capital gain liability?

3. The house in question was clearly my PPR for the vast majority of the time I owned it (i.e. all but five months of 115). Is it possible that just a few months rental could change its PPR status uttery? In other words is there some test under which any reasonable person would deem my property to be my PPR and treated as such for CGT purposes.

 

[jpd]

Re: CGT and Principle Private Residence

Not sure that I understand the PPR bit. If you didn't live there, then it was obviously not your PPR. Whether it was empty or rented has no bearing on the CGT calculation.

You need to calculate: length of ownership : Oct 96-Apr 97=115 months
Length of PPR: Oct 96-XXX 05 = X months, between 99 and 111 months

Fraction of gain taxable = (115-X-12) / 115 so between 0% and 3.4% of gain

 

[Persius]

Re: CGT and Principle Private Residence

Do a search of the forum for CGT on property.

Basically in Ireland, there is no CGT due if the property was your PPR for the whole duration of ownership. Once the property ceases to be your PPR, then you have 12 months in which to sell the house to remain exempt from CGT.

If you keep the house for more than 12 months as while it is not your PPR, and then sell it, CGT is calculated on a proportianal basis. Proportions are worked out purely on a time basis - e.g. if it was your PPR for 75% of the time, 75% of the profit is exempt from CGT. The calculation is a bit more complex. Note it's irrelevant how much the property has risen (or fallen) in value for the period when it was no longer your PPR when working out CGT.

Now I'm not sure of the effect of the house being abroad, but don't think it should affect calculations. I also don't know if being non-domiciled in Ireland has any relevance here. Finally I've no idea whether the UK taxman might have a claim on tax on proceeds of the sale. From the Irish side, check out www.revenue.ie for further info.

 

[Thrifty]

As Persius says above the the Capital gains is done on a percentage basis- In relation to the payment of capital gains tax i would imagine you will have to pay UK capital gains tax on it first as it's a property and then whatever you've paid is a credit against the Irish capital gains tax.
I understand that the Capital gains tax has been reduced to 18% in England recently so you shouldn't end up paying more by paysing english CGT first.

 

[mck26]

Re: CGT and Principle Private Residence

Not sure that I understand the PPR bit. If you didn't live there, then it was obviously not your PPR. Whether it was empty or rented has no bearing on the CGT calculation.

You need to calculate: length of ownership : Oct 96-Apr 97=115 months
Length of PPR: Oct 96-XXX 05 = X months, between 99 and 111 months

Fraction of gain taxable = (115-X-12) / 115 so between 0% and 3.4% of gain

hi new to all of this just one thing in the the 12 month deduction does this count if you have another house. In the capital gains tax guide on the revenue ( free to download ) site see below extract which is in bold in the guide. ( Chapter 5 of the quide ) so anyone who held onto their old house would not be eligable for the 12months exemption ????

"In addition to the twelve months referred to above, the following periods of absence from the house are also regarded as periods of occupation provided that, both before and after those periods, the house was the owner’s only or main residence and that throughout those periods he/she had no other house eligible for exemption:-"

 

[Nige]

the periods of absence referred to there are those when the taxpayer was living elsewhere due to working somewhere else in the country or abroad.

The least 12 month deemed occupation applies regardless.

 

[Lorena]

Hi, I jointly owned a house with another family member. I lived in the house for 76 out of 86 months and then rented it out for the remaining 10 months at which time the house was sold (just 3 mths shy of the 12 mths lease). The other family member only lived in the house for 8 months.
So.. if i understand this correctly, I am not liable for CGT (based on the 12 mth rule) but my other family member is liable and can offset his 8 mths of living there under personal exemptions.
Gain x mths of occupation/mths of ownership.
Does this sound right? Thanks L

 

[asdfg]

Gain x mths of occupation/mths of ownership.

Half the gain less buying and selling expenses (legal and auctioneers and Stamp duty)

I take it stamp duty was paid at some point at the investors rate.

Was the house (room let) by the other family member and did he/she receive rent. As you received rent you have to make a return of rental income.
See [broken link removed]