Moving into investment property

[ainsie]

Hi

We are moving abroad soon(I hope). Our situation is this. We purchased an investment 4 years ago with the plan to move into it so did not rent for 6 months. Changed our mind and stayed in our 1st house. Payed full stamp duty on investment. This year we put both houses on the market. Our PPR sold 1st and we moved into the investment which is now our PPR (since Feb)
Anyone have any rough idea on how the capital gains will work? I will get advise if I ever sell this house but for me working out rough budgets for my move I need an idea and have not a clue.

The investment was brought for 202000 € and will sell for roughly 350000. Paid €8000 stamp duty, Will pay roughly 4000 agent and 1500 law fees. Did roughly 30 K work on house.

Hope I can get some help as knowing how much CGT I might pay will have some influence on how much I sell for.

Thanks

 

[asdfg]

Sale of house ..................................350,000

House Purchased in 2003 for 202,000
Improvements ....................30,000
Buying exps .........................2,000 say
Stamp Duty .........................8,000
Agent & Legal exp ................5,500
Total Deductions................247,500

Gain ................................................102,500

Lenght of time owned property say 48 months
Lenght of time as investment property say 40 months
(you will have to substitute your figures for above. I'm pretty certain that the period of ownership prior to letting will be counted as an investment)

Calc = Gain * Lenght of time as investment property minus 12 months / Lenght of time as investment property

So 102.5K * (40-12) / 48 = 59.8K
Less personal allowance 1.27K (assuming you are not selling any other assets for a gain during the year)
59.8 -1.27 = 58.53 @ 20% = 11.71K

Hope this helps and does not confuse to much

You should run this past a tax advisor / accountant / solicitor

 

[ainsie]

Sale of house ..................................350,000

House Purchased 2003 202,000
Improvements ..............30,000
Buying exps ...................2,000
Stamp Duty ...................8,000
Total Deductions...........242,000

Gain

So I dont get any relief for the fact that it is now my PPR and I might end up living there for a year , the way selling is going.?

 

[Howitzer]

So 102.5K * (40-12) / 48 = 59.8K

This minus 12 is incorrect. I believe you only get this grace period where you've changed a property from being a PPR to an investment, not the other way round. Otherwise it would be as you suggest with your figures, that you could move into an investment property for a couple of weeks and significently reduce your CGT bill.

To the OP, you are only liable for CGT for the Proportion of time that your property was an investment property so the figures above would be correct; 102.5 * 40 (length of time as investment) / 48 (or eventual total ownership time) = 85.42K @ 20%.

 

[asdfg]

If you were to live there for another 12 months and leaving aside the minus 12 issue.

The calc would be as follows;
Lenght of time owned property say 60 months
Lenght of time as investment property say 40 months
(you will have to substitute your figures for above).

So 102.5K * 40 / 60 = 68.3K @ 20%

 

[ainsie]

Thanks for all that. I think I understand it all but do need to find out about the 12 months grace thing.

Thanks again

Tom

 

[Nige]

The legislation provides that, if the property was ever your PPR, then you will automatically have the final 12 months of ownership treated as if it were your PPR. Where you were living in the house during these 12 months anyway, there is no extra relief.

In the present circumstances, the OP has been living there for 8 months. If it property were to sell today, it will be treated as a PPR for 12 months only and, as an investment property for 48 months (based on a 60 month ownership period).

 

[ainsie]

The legislation provides that, if the property was ever your PPR, then you will automatically have the final 12 months of ownership treated as if it were your PPR. Where you were living in the house during these 12 months anyway, there is no extra relief.

In the present circumstances, the OP has been living there for 8 months. If it property were to sell today, it will be treated as a PPR for 12 months only and, as an investment property for 48 months (based on a 60 month ownership period).

So if I were to sell in say 6 months(which I'm afraid will happen), I'd get the 12 months relief and only have to pay CG on the 36 months it was an investment and any increase from now on(some hope) will not be liable.

Thanks