PPR - Rented - PPR : CGT?

[bacchus]

The following scenario came up while i was having a chat with a friend, and no agreement was reached. So, here is the case.

John bought a property on 01/01/1995 and the PPR/Rented history of his property is as follow

PPR: 5 years
01/01/1990 €100k Purchased
31/12/1994 €300k

Rented: 5 years
01/01/1995 €300k
31/12/1999 €300k

PPR: 5 years
01/01/2000 €300k
31/12/2004 €450k Sold

The total period of ownership is 15 years. During this period, the property has been rented for 5 years

Taxable amount = €450k - €100k = €350k (let's ignore deductables for this exercice)
John should therefore pay Capital Gain Tax on [Taxable amount * ( (5 - 1) / 15)]

But considering that no capital gain was made while the property was rented, and on the assumption that valuations were done at each key dates, e.g 01/01/1995 & 31/12/1999, is there any way the CGT could be €0 ?

 

[ClubMan]

But considering that no capital gain was made while the property was rented, and on the assumption that valuations were done at each key dates, e.g 01/01/1995 & 31/12/1999, is there any way the CGT could be €0 ?

The timing of the gain is irrelevant. What matters is what proportion of the total gain is assessable for CGT. It makes no odds that no capital gain was made over the rental period.

 

[Howitzer]

Also, the "- 1" doesn't apply in this case. It seems to be a quirk of the rules that the grace year gets lost if you move back into a PPR-rented-PPR property. So CGT would be 20% of 350/3 = ~23.33K

 

[ClubMan]

Also, the "- 1" doesn't apply in this case. It seems to be a quirk of the rules that the grace year gets lost if you move back into a PPR-rented-PPR property. So CGT would be 20% of 350/3 = ~23.33K

Looks like that could be the case alright:

Capital Gains Tax

As ever get independent, professional advice when making a return.

 

[bacchus]

Well, looks like we were both wrong on differents grounds then....

Interesting point regarding the "-1"...

Howitzer wrote that the "-1" does not apply in the CGT calculation while the thread highlighted by Clubman seems to imply that it does

The last 12 months exemption was introduced by Revenue to help people who rented/ bought a new house but have failed to sell their previous PPR. The only condition required is that a some stage the old house was your PPR.

 

[ClubMan]

while the thread highlighted by Clubman seems to imply that it does

There is a difference of opinion between some contributors in that thread. The position with the 12 month PPR CGT "exemption" (I use the term loosely!) period is not totally clear. You need to get independent, professional advice. I suspect that it does not apply here though as mentioned earlier.