CGT - sale of second property in one name only

Hi,

My husband is selling a second property that is in his name only. We are sale agreed but no contracts drawn up yet. A query came up in the calculation of the Capital Gains

The sale agreed price is 403K. It has been suggested that my husband gifts me half of the property before the sale contracts are drawn up. The current market value of the house is the sale price so the value of the gift is €201k. There would be no CGT liable on my part of as the value of the gift and my share of the sale proceeds are the same so no profit on the sale for me. The CGT liability would then be calculated on my husbands share 201k. The liability is currently calculating at 80k aprox


I have rang a few Tax Advisors but can't get a definitive answer so guessing it's something we should not do'

Any advice?

Thanks

NOCLUE said:

It has been suggested that my husband gifts me half of the property before the sale contracts are drawn up.

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Suggested by who?

It won't work. If CGT was this easy to avoid, nobody would be paying it in full.

You’d take over his base cost so it wouldn’t work.

It would be better if you set out the figures as below


It is true that a couple can transfer assets between each other but the cost of acquisition is the original cost, not the value on the date of transfer

jpd said:

It would be better if you set out the figures as below

Sale proceeds	403
Cost of property when purchased
Capital gain

It is true that a couple can transfer assets between each other but the cost of acquisition is the original cost, not the value on the date of transfer

Click to expand...

I’m going to go out on a limb and guess it’s around €163k for the base cost and €240k for the capital gain…

Hi,

Thanks for all the responses, thought as much. We were prepared for the 80k liability but are finding it difficult to calculate a more exact figure. We need to submit a CGT figure to get consent to sale from Pepper Finance as our residential mortgage is tied up with the second property We are going to get an Accountant to file the return but have rang a few and besides issue above scenario are getting varying advice and now I don't know who to get to do it.

Sales proceeds 403k
Associated costs /allowances/enhancements 12K
Cost of house in 1998 144K (bought with ex partner jointly so husbands cost 72k
Husband bought our partner in 2001 41K husband re mortgaged to pay the 41K - house valued at 226K at the time

I have not indexed up the figures but basically 403-12-72-42=277 277*33=91k

The figure are not indexed yet so will reduce the amount and husband lived in the house for over 4 years so need to allow for that. Is there any allowance reduction for husband taking over the full mortgage on 2001 at a Value of €226. This is the bit I can't get advice on, ither there is none and figures are as is or I am not explaining my self properly when asking

Thanks

He bought the property in two tranches. That is, assuming ownership was transferred?

Mortgage not relevant when calculating CGT.

The mortgage is a financing issue, i.e. how you financed the purchase of an asset.

CGT is concerned with the value of the asset, not how you paid for it.

What are associated costs / allowances / enhancements 12k - depending on what they are, some could be allowable against CGT?

The initial cost of 144k in 1998 can be indexed up by 1.232 = 177k or by 1.212 = 175k depending on the date of purchase - you can assume 1/2 of that if the purchase was done equally
The additional payment of 41k in 2001 can be indexed up by 1.087 = 45k
All of these need to be done to euro - not 1000s of euros

Did he live in the house as his PPR ? Was it rented out?
Relief is given for the period of PPR

As other posters have said, the mortgage amounts and payments have no bearing on the CGY calculation

Yes, became sole owner in 2001. I think I understand about the mortgage not relevant. So the cost of purchase for calculating the CGT is 72K plus 41K.. These are the euro amounts and understand it has to be done to the euro and then each can be indexed by the relevant multiplier.

It was his PPR for 4 years. The associated costs are his 1270 allowance, solicitor and estate agents costs for both the purchase and the sale of the property.

Thanks very much for all the help and the quick responses.

No, the cost is half the index-adjusted value of 177 plus 45 - please read the answers

The annual allowance is not a cost.
The legal and other costs can be index-adjusted if they were spent before 2004

He will get relief for the 4 years it was his PPR + 12 months