Moving abroad - tax and cgt query

C

carley

Guest
Hi - my husband has recently been asked to move to the US with his employer and we are trying to decide what to do with house while we are away, we are concerned that if we rent it out to cover the mortgage repayments then we may be liable for capital gains tax on selling the house when we return and this might negate any benefit of renting it out.
I found the following on revenue.ie cgt leaflet and was wondering if anyone could clarify it for me:​

"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."​

Does this mean that if my husbands employer moved his location and he had to go abroad as part of his job then we would be covered by the above conditions and the house would be classed as our private residence for tax purposes and not liable for capital gains tax when sold ?. However if the move abroad was a voluntary one, then would it no longer apply as it wasn't a requirement of his employment conditions?.​

If we rent the house out while abroad does the house become an investment property under taxation and then become liable for capital gains tax when sold ? If so, is CGT calculated on gains made from when the house was initially purchased (2.5 years ago) or only from the period of when the house was rented out ?​

Can CGT liability be cancelled if we live in the house as our private residence for a period of time when we return to ireland ?​

I would really appreciate any advice / opinion on this query as i have found conflicting reponses to cgt queries. We do not necessarily want to make any profit if we rent - just need to cover mortage repayments while aboard. However, since we are not planning on living in this house long-term whether we go the the US or not, I am wondering if financially would we be better off to sell house before we leave and save/invest profits then purchase another on our return to ireland ? I am worried that capital gains tax might negate any benefit of renting the house out while abroad and we could loose money on cgt when we go to sell it it a future date.​

Thanks​
 
As your husband is going abroad as a condition of his employment, any absence from the house is still exempt as the house is still considered to be PPR, as long as you come back and live in the house afterwards.

There will therefore be no CGT if the house is subsequently sold.

However, please note that if you do not return to live in the house there could be a CGT liability.

If you want to look at potential scenarios and any tax costs on these, you should get tax advice in this regard.
 
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