CGT on second house sale?

J

JOEC26

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My parents are elderly pensioners & are selling a house that has been in my fathers name since it was left to him in the 1950's (He built it with his dad). The house was left to him with the stipulation that his mother would live in in for the duration of her life. She passed away in 2003. This house is of course not my parents "principal residence" & has remained unoccupied since 1998, when my Grandmother went into a nursing home. The simple question is, are my parents liable for full CGT on the proceeds? Joe
 
Principle Private Residence relief also applies to a dwelling which was the sole residence, rent-free, of a dependant relative. Obviously this doesn't cover all the period of ownership, but most of it, so there will be a considerable relief.

CGT was only brought in in 1974, so the starting cost will be the value as at 05.04.1974. Indexation applies up to Dec 2003, and any sums laid out on capital improvements will also be allowable as an indexed expense.

Just a tip: often the solicitors involved in the sale prepare the CGT return, and can charge enormous fees, sometimes based on a percentage of the selling price. It would be worth asking an accountant to quote a fee.
 
Gervan said:
Just a tip: often the solicitors involved in the sale prepare the CGT return, and can charge enormous fees, sometimes based on a percentage of the selling price. It would be worth asking an accountant to quote a fee.
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often....sometimes...can. So we are to surmise that those pesky solicitors can charge an ''enormous'' fee for doing a CGT return? And your evidence for this is?
 
Vanilla said:
often....sometimes...can. So we are to surmise that those pesky solicitors can charge an ''enormous'' fee for doing a CGT return? And your evidence for this is?
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And of course none of those overpaid, underworked, Beemer driving accountants would ever do that would they Vanilla :D ( PS Where has Rabbit gone , one misses his frequent lacerations across the professions )
 
I could name specifics, but the "pesky solicitors" would probably have me up in court. I've seen it, several times, scandalous fees.
 
Gervan said:
I could name specifics, but the "pesky solicitors" would probably have me up in court. I've seen it, several times, scandalous fees.
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And I've seen some accountants make a mess of a CAT return but I am smart enough to know that that doesn't mean that ALL accountants make a mess of them etc etc. You get the drift. BTW I'm guessing you are an accountant.
 
Thanks Gervan for your reply (even if you did get a bit of a tongue lashing from the others!). Im sure you'll take it with a pinch of salt. We'll get some prof advice on this basis! My parents will be pleased with this much anyway! Joe
 
House sold

Gervan said:
Principle Private Residence relief also applies to a dwelling which was the sole residence, rent-free, of a dependant relative. Obviously this doesn't cover all the period of ownership, but most of it, so there will be a considerable relief.

CGT was only brought in in 1974, so the starting cost will be the value as at 05.04.1974. Indexation applies up to Dec 2003, and any sums laid out on capital improvements will also be allowable as an indexed expense.

Just a tip: often the solicitors involved in the sale prepare the CGT return, and can charge enormous fees, sometimes based on a percentage of the selling price. It would be worth asking an accountant to quote a fee.
Click to expand...


hi; I know its a lonmg timne since 2009, but the house has now been sold for 50K. Can you advise how one should calculate or would we need to use an accountant? Alternatively should we just give the figures to the revenue? Regards, Joe
 
My advice to you is to read the following information from the revenue abour CGT.
it will give some basic information on how to calculate the CGT if the case is simple.

It should give you some sort of indicative figure. If the case is more complicated, try to get a recommendation for an accountant who can help and is not expensive.

http://www.revenue.ie/en/tax/cgt/leaflets/cgt2.html#section11

I have made up some figures to give you some indication of how this is done in a simple case.

Value in 1957 - €600
Value in 1974 - €2000
Inflation index from 1947 to 2003 = 7.5
So the value that your parents got the asset at is 2000 * 7.5 = 15K

They sold it for 50K. The fees to sell were 2k

48K - 15K = 33K * 30% = 9900. There is a tax credit of 1270 per person,so the tax payable is 8630.

I am not an accountant, so I dont know if I have made any mistaked there, and the information in your case is probably more complex.

Read the revenue booklet and see if it makes sense.

Gervans point about PPR relief may be relevant if your mother was financially dependant on you, but I dont know if she was.
 
I recall something about the death of the life tenant being an exempt disposal for CGT. Could be the value was the 2003 value for CGT.
 
Life tenancy & CGT

Hi. My parents sold a house last year that my Grand Mother lived in FOC until her death in 2003. (she was in a nursing home until 1998). Does this impact on the CGT calculation? Thanks. Joe
 
It does make a difference, what dates did she reside in the house, as Vanilla asks did she have a right of residence or a life interest?
 
Hi; It was in my Grandfathers will that she could live there as long as she lived. She was there from 1947 until 1998 at which time she went into a nursing home.
 
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