Tax advice on house sale

S

Sparky1972

Registered User
Messages
32
Hi All,

Hopefully someone can give advice here on the best way to proceed. The scenario is as follows:

I bought a House 3yrs ago as a First Time Buyer. The original intention was for me to live in the house so the house is registered as my sole residence with all Utility Bills and Mortgage correspondance coming to that address.
After buying I decided to rent house and I lived elsewhere renting an apartment. So in summary I had a house which I considered my primary residence, however the house has always been rented and I lived elsewhere renting an apartment.

The rent on the house has been 145euro/week paid weekly into my Bank a/c, however I have never declared this from a Tax point of view. I had always considered that if I sold the house, then I would use the rent a room scheme and state that I was living there also, as all bills etc are in my name and hopefully avoid Capital Gains Tax. However I never submitted any applications or forms for 'Rent a Room' scheme.

I am now working in Europe having left Ireland end of '06. I have decided to put the house on Market. Can anyone advise how I can sell and not be liable or be exempt from Capital Gains or is there anyway that I can reduce my Tax Liability.
Look forward to your advice.
 
Sparky1972 said:
I am now working in Europe having left Ireland end of '06. I have decided to put the house on Market. Can anyone advise how I can sell and not be liable or be exempt from Capital Gains or is there anyway that I can reduce my Tax Liability.
Look forward to your advice.
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Not sure if you'll recieve the advice you're looking for. You're asking people to advise on tax evasion and I severly doubt you'll get many replies.

You were due to pay a Stamp Duty clawback the minute you rented the house under a non RaRS method.

Whether you considered it your PPR or not, in Revenue's eyes it wasn't your PPR and so you'll be due to pay CGT on the sale.

Whether you choose to pay either of these is on your own head.
If you don't, Revenue can come to you at any stage (no 4 year cut off) demanding the payment along with additional fees, interest and penalties.
 
Sparky1972 said:
So in summary I had a house which I considered my primary residence, however the house has always been rented and I lived elsewhere renting an apartment.

...

however I have never declared this from a Tax point of view. I had always considered that if I sold the house, then I would use the rent a room scheme and state that I was living there also, as all bills etc are in my name and hopefully avoid Capital Gains Tax
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You have been ripping compliant taxpayers off by dodging your tax liabilities. AAM does not condone or facilitate tax evasion so please don't ask for advice on same.

You need to work out and discharge your outstanding tax liabilities (e.g. stamp duty clawback, rental income tax etc.) first as a matter of urgency. You should get independent, professional advice.
 
Thanks for the information. It has been careless of me in relation to teh Tax Returns which I am now trying to get in order. For Tax Adjustments that should have been submitted in the years 2004 and 2005, How do I now submit these.
 
You should get assistance from a tax advisor/accountant because they may be able to help you to properly assess your liabilities and maybe assist with mitigating any interest/penalties that may be due. You need to pay the stamp duty clawback (if applicable) which was due when the property was first rented out.
 
There was no Stamp Duty applicable on this house at time of purchase, hence I guess the stamp duty claw back does not apply.
Thanks for your advice
 
Sparky1972 said:
There was no Stamp Duty applicable on this house at time of purchase
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Since you are guessing I presume that you are not absolutely sure that an investor purchasing the same property would not have been liable for SD? If they would have been then that is what your liability is (and it's overdue). Just because an owner occupier was not liable for SD on the purchase (e.g. perhaps it was a new house or second hand one under the relevant exemption threshold) does not mean that an investor owuld not have paid SD. How much did the property cost three years ago?
 
The property cost 153,000 Euro 3yrs ago. Let me know if the Stamp Duty Situation applies.
Thanks for your help Club Man.
 
I presume the property was new so was exempt from SD for an owner occupier? At current rates an investor would pay 3% or €4,590 on that purchase. I think the same rate applied three years ago too. You really need independent, professional advice to clarify and deal with your outstanding tax liabilities urgently.
 
It looks to me like you might well have a Stamp Duty clawback. An investor who purchased a house in 2003/4 for €153,000 should have paid duty at 3%.

This link may be of some assistance. [broken link removed]

Best bet is to talk to an advisor.
 
Only if you were a FTB owner occupier and you have already stated that this was not the case but that you rented the property out, presumably from day one but certainly within the first five years of ownership, which would have triggered the investor SD clawback liability.
Sparky1972 said:
After buying I decided to rent house and I lived elsewhere renting an apartment. So in summary I had a house which I considered my primary residence, however the house has always been rented and I lived elsewhere renting an apartment.
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You seem to be having some trouble accepting that you are almost certainly liable for this SD clawback, and that it is well overdue, no matter how many times people here tell you. You really need to contact an independent, professional tax advisor to set you straight. They will also set you straight about (a) your presumably outstanding rental income tax liabilities and (b) the fact that you have fraudulently claimed owner occupier mortgage interest tax relief if you have been claiming this all along.
 
Thanks for all the inputs. The affairs are now with an Accountant so all is been sorted to get things update. I have decided not to sell due to the CGT implication.
Thanks Again
 
Sparky1972 said:
The affairs are now with an Accountant so all is been sorted to get things update. I have decided not to sell due to the CGT implication.
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The CGT is only payable on gains made and when certain reductions (annual exemption, sale costs etc.) are included to get the taxable amount the CGT bill might not be a huge burden.

Trying to cover the SD & other tax liabilities without the proceeds of the sale may be streesing and troublesome enough to make thinking about the sale (to cover the costs etc.) worthwhile.

Check out the full details on CGT either here on AAM or directly through www.revenue.ie so you understand the full details of your possible liability.

Understanding all, or as much as possible, of the details is the only way to make really informed decisions on something such as property.
 
Just as a general aside question for information.

What are the CGT implications on a property in Ireland when person has moved abroad
1) If it is considered your primary residence and
2) If it is considered an investment property

Is the CGT due on both of these above, as because you have left it is no longer your primary residence.
 
Sparky1972 said:
What are the CGT implications on a property in Ireland when person has moved abroad
1) If it is considered your primary residence and
2) If it is considered an investment property

Is the CGT due on both of these above, as because you have left it is no longer your primary residence.
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The final 12 months of ownership of a PPR before sale are still considered as the property being a PPR (for CGT calculations), the 12 months are to allow for the sale to take place etc.

If you have moved abroad (permanently), it can no longer be considered as a PPR.
In your case, I don't believe that it has ever been a PPR, so the exemption period probably does not apply. Though that doesn't stop people in similiar circumstances claiming it, again, not worth the risks should Revenue ever come after you.

Do check with professionals, some of the specific details go beyond the general knowledge that I (and most others) have and to be taken as my opinion/understanding rather than advice! Only posted to help the OP gain some understanding of the possible problems.
 
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