CGT Implications On PPR

[frunzy]

Hi all,
We are seriously thinking about buying a new property and renting out our PPR which we've had for 10 years. We are a little confused about the ctg implications if say we go to sell the house in a year or two. We don't propose selling it unless we had to (couldn't rent it or needed money).We bought house for £69000(ir pounds) and topped up the mortgage by €50000 last year. Any advise appreciated.
Thanks

 

[ClubMan]

The first 12 months after vacating it as your PPR are exempt from CGT. Thereafter CGT applies. If, for example, you vacated it now and rented it for 5 years before selling (i.e. owned for 15 years, PPR for 10, rented for 5) then you would be liable for CGT at 20% on (5-1)/15 = 4/15ths or 27% of any capital gain arising. Just dealing in round years for simplicitly here. The normal CGT calculations apply (e.g. indexation of the purchase price up to c. 2003, deduction of allowable expenses from the gross gain allowed etc.). Mortgage issues are irrelevant to the CGT issue although they may be relevant to the rental income taxation issue - e.g. any mortgage outstanding that was used to purchase the erstwhile PPR/now rented property can be offset against rental income when calculating tax liabilities. You should get professional advice on all of the tax and other implications of renting out your PPR.