CGT & Stamp. Unique situation?

[Tango1]

Hi

I am looking for some advice regarding my property

Secondhand property bought in November 2000 for 175,000 punts
Paid approx. 7000 punts stamp duty.
In 2002 due to a death in the family I moved back to the family home.
I rented the house from August 2002 until the present day.
In 2004 I moved to rented accommodation, where I remain today.
I have paid full income tax on the rental income for 4 years.
The house is worth approx. 500,000 euro today.

I know there are other threads on Clawback Stamp and CGT, but I haven’t come across one where the owner moves out to live at home or rent.

Is my house regarded as an investment property from 2000?
If I move back into the property would it change the clawback or CGT situation.

Many thanks for any advice offered.

T.

 

[murp]

If you dispose of the property a certain element of the gain will be liable to CGT.

In your case if you sold it now in 2006, 3/6th's of the gain will be liable to CGT.

2/6ths will not be liable to CGT on the basis that you lived in the house for 2 years of the 6 years of ownership and 1/6th will not be liable on the basis that there is deemed occupancy for the last year of ownership, given that it was a principal private residence of yours initially.

Did you get any element of stamp duty relief when you purchased the property? There can be a claw back of any stamp duty relief if a property is rented out within 5 years of purchase.

 

[Tango1]

Thanks for that. Didn't know about the partial CGT

Is this how it pans out
500k todays value
225k (euro) origional cost
0 deductions
little or no inflation

275 at 20% = 55 * 3/6 = 27.5k CGT

I just had a look at the revenue site and it looks like i did get relief in 2000
From the Finance no 2 bill 2000 i paid 3% as a first time buyer. Investment stamp at the time was 9%. This means i have to pay 10.5k (6%) + interest and fines?? Gulp....

Thanks again for the help.

 

[asdfg]

Don't forget to apply the multiplier to the original cost 14.4%
Deductions can include solicitors and auctioneers fees for buying and selling. You can also apply the multiplier to these costs

So your example
500k todays value
225k (euro) origional cost 257K after applying the multiplier
0 deductions

500 - 257 = 243 at 20% = 48.6 * 3/6 = 24.3k CGT

 

[Tango1]

Thanks for that. I'm still in around the 20=25k CGT if i sell today.
I think the clever thing to do is move back in.

This means in two years time 4/8 would not be liable and 1/8 for last year of deemed occupancy => 3/8 of the gain would be liable.
Please correct me if i am wrong.

Wondering if anybody knows if moving back in would help my stamp duty situation? Or if there is any other way of reducing the cost.....
When i moved out it was due to a family berevement, I knew in the back of my mind it would cost me a few bob, but i never thought it would be 10-15 grand

Many many thanks again - i really want to get all this straightened out and try move on.

 

[room305]

Wondering if anybody knows if moving back in would help my stamp duty situation? Or if there is any other way of reducing the cost.....

Stamp Duty duty clawback was liable from the very first day you received rent on the property. There is nothing you can do to avoid that now and it really should have been paid.

AFAIK the fine is double the clawback and interest is due at a daily rate of 0.0246% (approx. 9% a year) on the combined total of the clawback and the fine ...

I've heard of the fine being waived but I would imagine this is more likely if you come clean with them rather than if they have to go looking for you.

 

[Tango1]

Cheers, looks like i need to talk to the revenue, to get it sorted.

For the last few years i've been focusing on my family and kind of neglecting my finances. It's good to finally get an idea of where i stand......

I have a great family renting my house who have settled well in the area. The money i can handle...... telling them to leave will be very difficult.

Looks like doing the right thing by my family has cost me a small fortune....... but i'd still do the same again tomorrow if i had to.

Many thanks everyone. I will let you know how i get on with the revenue

T.

 

[Mairead]

I bought a house in 2001 which I lived in for a year and a half and then bought another house in a different city so rented out the first house.
It was a new build which cost 245000 in 2001. It is valued at 500,000 now.
If I sold this in the morning what taxes, clawbacks am I liable for?
Does anyone know how much CGT exactly I would have to pay, and clawbacks?
I am wondering if there are going to be so many costs should I just hold onto it longterm. Very ignorant about this whole area so all help would be very much appreciated.
Have two small kids and a big mortgage and could probably with releasing the money from this house, but not sure what to do for the best.

 

[ClubMan]

I bought a house in 2001 which I lived in for a year and a half and then bought another house in a different city so rented out the first house.
It was a new build which cost 245000 in 2001. It is valued at 500,000 now.
If I sold this in the morning what taxes, clawbacks am I liable for?

You were liable for the SD clawback when you first rented it out so that liability is overdue! You were liable for the SD that an investor would have paid on the purchase at the time your bought.

Does anyone know how much CGT exactly I would have to pay, and clawbacks?

The portion of any gain assessable for CGT is related to how long you lived in the property versus how long it was rented out. For example (based on years for simplicity) if you owned it for 6 years, lived in it for 1.5 years and rented it out for the remainder then you would be liable for CGT on (6 - 2.5)/6 = 3.5/6 = 58% of any gain.

I am wondering if there are going to be so many costs should I just hold onto it longterm. Very ignorant about this whole area so all help would be very much appreciated.

You really need to get independent, professional advice on this and discharge your outstanding SD clawback liability ASAP.