How do i calculate CGT on my house?

A

amrb

Registered User
Messages
10
We are thinking of renting our house out for a few years. We want to work out roughly what the CGT will be, basically to see if it will be worth our while! Can anyone tell me how its calculated? thanks. I've had a look at the revenue website but its all like double dutch to me!
 
Take it this is not your main residence you are on about. If you are renting out another house you would not pay cgt you would pay income tax.
 
And CGT when selling a property that was rented out! Roughly how it works is that if you live in a property as your PPR for x years then rent it out for y years and then sell it (y-1)/(x+y) of any resale gain is assessable for CGT. For example live in a property for 6 years, vacate it and rent it out for 10 years = (10-1)/(6+10) = 9/16 = 56% of any resale gain is assessable for CGT.

If you convert your PPR to a rental property within 5 years of purchase then a clawback of stamp duty is also triggered.

See also the links in this post.
 
So do you have to get a valuation done of your house from when you decide to rent it out and then the % is paid on the incr from when it was rented to when it was sold? Or is it based on % of what it was bought for intially??
 
Redstarlet said:
So do you have to get a valuation done of your house from when you decide to rent it out and then the % is paid on the incr from when it was rented to when it was sold? Or is it based on % of what it was bought for intially??
Click to expand...

The latter.
 
Yes - in this situation it is a percentage (calculated as outlined roughly above) of the total capital gain that is assessable. The value of the property at the time of first renting it and any subsequent gain thereafter is irrelevant. It is the total gain from the time of acquisition and the portion of this that becomes assessable due to renting out that counts.
 
ClubMan said:
Yes - in this situation it is a percentage (calculated as outlined roughly above) of the total capital gain that is assessable. The value of the property at the time of first renting it and any subsequent gain thereafter is irrelevant. It is the total gain from the time of acquisition and the portion of this that becomes assessable due to renting out that counts.
Click to expand...

This is a very important point. If you have a PPR that has experienced significant capital growth to date, you are exposing a proportion of that growth to CGT if you rent out the house. In extreme cases, the CGT bill could be greater than any rental you might receive.

You therefore need to do your sums very carefully before deciding to rent out your house.

Regards
Homer
 
You must log in or register to reply here.
Back
Top