Sold flat in London - conflicting advice on CGT

S

sarahc

Guest
Hi,

Am looking for your help please. I have just completed on selling our apartment in London. We purchased the apartment in October 2003 and lived there until March 2006. We then relocated back to Ireland and rented initially from March 2006 until now. As we lived in the apartment do I have pay CGT - i have had conflicting advices off people.

Thanks for your help
Sarah
 
if the apartment was your main home whilst in london then no you wouldn't pay capital gains tax for the time you lived in it. as far as i know, and you could check this on the inland revenue site or call them, but i seem to remember reading somewhere that you can let your main home for 3 years from when you move out and you dont pay CGT so long as you sell it within that 3 years which is what your case is.
also, as it was only a year, this year could be viewed as "actively marketing your home" - read into that what u want, without me getting told off !
really dont think you have anything to worry about. take your sterling, convert into euros and happy days and quids in (or euros as the case is). always make sure to keep your paperwork for the sale in case the irish authorities want to know where you got your money from. they dont seem to ask in ireland but the english banks do ask and actually log the amount in their records ! - but this is nothing to worry about if your affairs are above board (money laundering i guess)
 

Regardless of position in Ireland you really need advice firstly as to whether you owe money to the UK authorities.Your Uk solicitor should know.
 
If you were resident for tax purposes in Ireland when you sold it then your CGT liability is to the revenue. Rental income is due to the UK tax man.
 
Yes you need to explore your liability to tax both in the UK and Ireland.

1)Ireland Capital Gains tax

At the point of selling your apartment in March 2007 ?, Im assuming that you are resident in Ireland, not ordinarily resident in Ireland (as you have been away)and also domiciled.
This means you are liable to capital gains tax in Ireland on any gains arising in the UK and Ireland for the year under assessment.
You are however entitled to PPR relief (Principal Private Residence) as you have lived in the apartment as your main residence up to one year ago. Under the Irish rules the last year of ownership is regarded as a period of "occupancy" even if you havent lived there during this last year.
If there is not more than one year between the time you moved out of the apartment and the time you sold the apartment then no CGT liability arises in Ireland.

Ireland Income Tax
If you have let the apartment in the UK and you are resident, not ordianrily resident and domiciled in Ireland during the letting year then you are liable to income tax on any "profit" from the letting In calculating your rental profits, any interest on a loan to purchase the property , letting fees or other expenses are deductible items. You may also get relief on any tax paid in the UK under the double taxation agreement between the two countries.

UK Capital Gains Tax
Under the PPR scheme in the UK you are likely to benefit from the PPR rules which provide for the last three years of ownership to be termed as periods of occupancy whether you are residing there or not. It would seem therefore that you have no liability to UK CGT.

UK Income Tax
Its likely that you will have a liability to UK income tax on the letting of the property. The liability to UK income tax and Irish income tax will be relieved under the double taxation agreements between the two countries.

I hope this helps
 
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