Resident in Luxembourg, selling house in Ireland, Where do I pay CGT?

D

Dave 123

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Hello, I bought a house in Ireland with my girlfriend (now wife) in 1999 for 98kpunts.In 2002 we moved over to Luxembourg for what we thought would be a year which has turned out to be 5 and counting.We were renting here until last year when we bought a house.We have been renting out the house in Ireland for the last 5 years and have had a property manager looking after it.We have received approx 7k a year after fees.
We are looking to sell the house in Ireland now and should get approx 315k euros for it.The tenants have been out for a few months now and all bills have gone back into our names.Our intention is to move back home at some stage but not just yet.
My question is firstly do we pay CGT here in luxembourg or in Ireland ?and second Is the CGT paid on the value of the house in 1999 or 2002 when we stared to rent it.(The primary residence issue is confusing also).
Any help on these questions would be appreciated.
 
You should seek Luxembourg advice on whether you have a tax liability there.

You will be subject to Irish CGT on the sale of a property here. The element of the gain relating to when it was your principal private residence (and the last 12 months of ownership are deemed to have been your PPR) will be exempt from tax. The exempt element is calculated on a time basis.

Your gain will be in the region of €164,000 (315k - (124.4 k * 1.21) and take away other costs of acquistion and sale)). You have owned the house for 9 years. Of that, let's say it was your PPR for 3 years. It is deemed to be your PPR for the last year too, so that gives us 4/9 years exempt, or 5/9 years of gain taxable. This leave you with €91,000 taxable at 20%, or a tax liability of €18,222.

You should note that it will be deemed to be your PPR for all the time of ownership if your absence from it was when you were working abroad (which I take it you are) and you live in it both before and after that time abroad. So, if you were to come home for a short while and live there, you may be able to sell it without any liability to Irish tax.
 
I think (but could be wrong ) you would pay cgt in Ireland on the portion of profit made on the house from when you left 2002 plus 12months free period,so the tax would be paid on the profit made from 2003 value (say 200k ) and 2007 what u sell for (say value 315k) so you liability would be calculated on a gain of 115k euro taking into account your exemptions and deductions .then if you are tax registered in luxembourg you would have to do a return there too and the tax people there would give you credit on what you paid in Ireland . YOU REALLY NEED ADVICE FROM A TAX EXPERT AS ITS A BIT OF A MINE FIELD ,AND I COULD BE COMPLETLY WRONG ;)
 
Thanks for the information Nige .We are back in June for two weeks vacation, do you think this would qualify as it being our PPR?? Who could I contact about this matter? Anyone know a good accountant in the Limerick area?
 
I don't think that two weeks would be enough.

If you or your wife incapacitated relative or a widowed parent, there is provision whereby if such a person lives rent-free in the house, it will be treated as were your PPR during the time that person lives there. If you have such a relative, it might be a runner to put them in there for a while.
 
I think Nige's advice is correct.

The only small addition to his advice is that you should check if (as a person who isn't tax resident/ordinarily resident in Ireland assuming you've been pretty much totally away since you left for Luxembourg) whether you can claim the €1270 annual exemption from capital gains.
 
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