Home previously rented out

Hi,

I used to rent out my current home. It was rented out for 3.5 years approx while I was living overseas. I bought it while I was overseas and it was rented out from the outset, under a buy-to-let mortgage. I have been living in it now (as my home) for a year, and plan to move next year or thereabouts. I hame also changed from the buy-to-let mortgage to a home-owners one.

My question is:
Is it possible that I would get caught for CGT on the sale of it?

Cheers.

Absolutely. My understanding is that it would be based on the proportion of time the house was not your PPR. Best to speak to a tax professional.

I there not some kind of relief where you have been living in it as you home for N years prior to sale?

The only "exemption" available is for the final 12 months of ownership, where a property can be considered as a PPR even if it is an investment property.

In this case, the exemption is Non Applicable as the property will be your PPR for the final 12 months of ownership.

You will have owned the property for 5.5 years (assuming you sell it in one year as detailed above) and it will have been your PPR for 2 years of that time. You will be due to pay 3.5/5.5 (or 7/11ths) [non PPR ownership/total period of ownership] of any CGT due on the property.

Thanks Satanta.

Ouch, thats going to hurt. Looks like I would nearly have been better off letting the house sit idle during the time !!

Interesting, just found this in the revenues leaflet.

Unfortunately,looks like it won't apply to me as I bought the house while I was aboad, had I bought the property before I left, looks like I would not be liable.

Taken from the following CGT leaflet:

http://www.revenue.ie/leaflets/cgt1.pdf
Section 5 (i)

In addition to the twelve months referred to above, the following periods of absence from the
house are also regarded as periods of occupation provided that, both before and after those
periods, the house was the owner’s only or main residence and that throughout those
periods he/she had no other house eligible for exemption:-
(i) any period throughout which the individual was employed outside the State; and
(ii) a period of up to four years during which the individual was required by the conditions of
his/her employment to reside elsewhere.

Be sure to check the allowable deductions when calculating the taxable gain (buying costs, selling costs etc.).

I would assume that the rental over the period would be well in excess of the CGT you will end up paying, but that will of course depend on the exact figures. Remember, it's 7/11ths of the CGT (20% of the taxable gain).... not 7/11ths of the total gain.

I assume Stamp Duty I paid would be allowed against the total gain.

As I wasn't treated as a FTB on this property due to the buy to let mortage, i expect I won't be for my next one either, - thereby never getting the gain of FTB status for stamp duty.
When you factor this in along with CGT and rental income tax, looks like the buy to let wasn't a fantastic investment really. I guess, property prices were certainly cheaper then, so there is certainly a gain in this respect.

raven said:

When you factor this in along with CGT and rental income tax, looks like the buy to let wasn't a fantastic investment really.

Click to expand...

The value of retaining FTB status vs. investment properties is a frequent debate here on AAM. There are still ways to gain SD exemptions as a non FTB (new builds under the size threshold), so not a total loss from your POV.

I'd suggest taking a look through the Revenue info on CGT, especially CGT1, while looking at allowable deductions etc.. Given the extra complexity of your case, there might be some merit is seeking specific/specialist tax advice on the sale. I can't see anything obvious which would result in a saving, but a tax expert might.