How is capital gains calculated?

M

Mir

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Hi again, if you are selling a house is the gain calcualted on the difference between the price paid and the value now:

as opposed to the value now minus the current mortgage outstanding?

Thanks. Mir
 
Basically it is calculated on proceeds less original cost (possibly indexed depending on date of acqusition).

You also have a personal exemption per year (€1270 in 2006) which can be deducted.

If you lived in it as your sole residence at any time you may have further relief.

This is a very quick summary, a search will give you more info. CGT can be complicated so it would be worth your while to get professional advice.
 
Thanks very much lightup, I'm just trying to do some very rough calculations and weighing up options between having to sell or trying to keep a property, will need to get prof advice at some stage no doubt.. thanks again.

I guess the index is to spread the gains over each year (something along those lines) I will have a look for more info as you said.
 
Indexation is a figure you multiply the cost by to increase it and thereby decrease your gain.

The index factor depends on the date of purchase and sale.

A list of the applicable index rates are available on revenue.ie.
 
If it is your PPR then there is no CGT payable.

If it is an investment property then the above applies with the exception
You also have a personal exemption per year (€1270 in 2006) which can be deducted.
Click to expand...

The personal exemption is only allowed in the year of disposal only

If you own the asset (house) for say 5 years you only get one personal exemption.

Indexation Relief is available here See Appendix 1
 
Note that after 2003 (or 2002?) indexation has no effect. If the property was purchased since then then indexation is irrelevant. Again Revenue have more info on this.
 
Thanks for replys. re indexation; can you take the cost then and multiply it
by the index figure up to 2004 ie purchased in 1996 (1.277) and deduct that amount from the gain?
 
Depends when you bought the property, if prior to 6/4 multiplier is 1.277 if after then 1.251 Don't forget to include costs Legal etc prior to appling the multiplier. If you made enhansements to the property then the cost incl multiplier if applicable can also be deducted.
 
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