Sale of Principal Private Residence and CGT exemption

AnnHal

AnnHal

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I recently sold my home in Ireland that I owned for 19 years. For 4 years and 2 months of that period, I worked for a UK company, was tax resident there and lived in rental accommodation. My adult children continued to live at home in Ireland. I still covered all the utility bills, and went back frequently. My accountant wants me to pay CGT for a 5 year period but I thought that you could work in the UK for 4 years and be exempt from CGT for that period, so I would only have to pay for 1 year?

Love to hear from someone in a similar situation, or who understands tax laws!
 
As long as you actually occupied the house as your PPR both before and after the period you were working abroad, then the entire period of absence during which you were working in an employment abroad can be treated as if the house was your PPR — Taxes Consolidation Act 1997 s. 604(5)(b)(i). There is no four-year cap for this provision.

(The four-year cap arises in connection with a different relief — if you're not living in the property for a period because your employer requires you to work or live somewhere else - not necessarily abroad - then you can count up to four years of that period as a period in which you were occupying the house as your PPR. So if your home is in Cork and your employer posts you to Carndonagh for two years, this is the relief you would avail of. Or, you work quite close to home but your job is being a live-in housekeeper or a live-in carer, so you can't live at home.)
 
It is not clear that his employer required him to work abroad

There is no reason given for working in the UK
 
For the s. 604(5)(b)(i) relief it's not necesary that your employer should require you to work abroad; just that you're in an employment, the duties of which are exercised abroad. So you can quit your Irish job, leave your home, go to Liechtenstein, get a job there, live in Liechtenstein while you perform that job, quit that job, return to Ireland, move back into your house, and claim the relief.
 
Thanks Tom for a very clear and knowledgeable reply! I rented out a room in my house for the period I was in the UK, as well as having my adult children living there. Is that a problem in terms of cgt rules?
 
AnnHal said:
Thanks Tom for a very clear and knowledgeable reply! I rented out a room in my house for the period I was in the UK, as well as having my adult children living there. Is that a problem in terms of cgt rules?
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Was it under the rent a room scheme or not?

Rent-a-Room Relief

This page overviews rent a room relief.
www.revenue.ie www.revenue.ie
 
AnnHal said:
I recently sold my home in Ireland that I owned for 19 years. For 4 years and 2 months of that period, I worked for a UK company, was tax resident there and lived in rental accommodation. My adult children continued to live at home in Ireland. I still covered all the utility bills, and went back frequently. My accountant wants me to pay CGT for a 5 year period but I thought that you could work in the UK for 4 years and be exempt from CGT for that period, so I would only have to pay for 1 year?
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Why does your accountant want you to pay.

Perhaps because it's easier for them to say 'pay' than to engage with the complexity of the tax law. I have noticed a number of instances of this ultra cautious professional advice, recently in particular.
 
AnnHal said:
I rented out a room in my house for the period I was in the UK, as well as having my adult children living there. Is that a problem in terms of cgt rules?
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No, it isn't. Obviously the income you receive from renting out the room is liable to income tax, but the fact that you are renting out the room doesn't affect your ability to access s. 604(5)(b)(i) relief when you eventually dispose of the property. You could have been renting out the entire house while you were in the UK and still claim the relief.
ClubMan said:
Was it under the rent a room scheme or not?
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It was not. To take advantage of the rent-a-room scheme, the room that is let must be in a residential premises that is occupied by the taxpayer as their sole or main residence during the tax year.

The s. 604(5)(b)(i) relief that allows a property to be treated as if it were occupied by the taxpayer, even though it wasn't, only applies for the purpose of calculating the gain on disposal. So far as liability to any other tax is concerned, the taxpayer is not deemed to have occupied the property while working abroad. So, to qualify for the rent-a-room relief, you must actually occupy the house as your sole or main residence.
 
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Hi.. I actually registered with the Irish Tenancy Board, not realising I didn't have to as the room was part of the main property, not a separate apartment. I didn't apply for the rent a room allowance as I was living in the UK at the time. My accountant is pushing me to pay cgt for the period I was away as he said you are not allowed to rent out any part of the house if you are living abroad.
 
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