CGT on Sale of Rental Property that was once PPR

  • Thread starter Finance Debutante
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Finance Debutante

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Brendan,

I looked up under Tax and Key Posts. But the link to CGT is not working.

If you own a house for the past 6 years and have lived there all that time and then want to rent it out, are you liable for CGT on value between when you rent it out and sell it, or from when you buy it and then sell it? My understanding is that you pay CGT on a 'gain'. So the time you live in it should not count.

E.g. Buy house in 1995 for €100K and live in it until 2005 at which time it's worth €300K.
Rent it out in 2005.
Sell it in 2010 at which time it's worth €400K

Do you pay CGT on €100K (difference between value in 2005 when you rent it out and value in 2010 when you sell it)
or
Do you pay CGT on €300K (difference between value of house when you bought it and value of house when you sell it).

Should the CGT be paid on just when you rent it out?

FD
 
The timing of when the property was rented or a PPR is irrelevant - it is the proportion of time that is important. For example, owned for 10 years, PPR for 4, rented for 6 means that 50% (I think! i.e. (6 - 1) / 10 = 50% - one year of the rental period is allowed as PPR time as far as I know) of any gain is assessable for CGT. Note that you don't do pro-rata calculations on the gain over the period of ownership and allocate different amounts to the PPR and rented timeframes. Does that make sense to you?
 
Thanks ClubMan,

Yes, that makes sense :)

FD
 
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