Key Post What happens to the 7 year CGT exemption if you hold onto the property for more than 7 years?

L

landlord

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Just wandering if someone could please help crunch the numbers
Considering selling my rental in a year or 2.
Many factors to consider but for now I just wanted to concentrate on this ….
Bought Jan 28th 2014 for cash for €120,000
Government offered at the time no CGT if held for 7 years. It is currently worth €265,000 and assume €260,000 after selling expense. Assuming this figure doesn’t change for the next few years.

I understand this 7 year no CGT benefit for me reduces from year 2021. But by how much does the benefit reduce and if I am earning €11,000 a year from it after ALL tax and expenses, does it make sense to hold for the decent rent or sell for the reduced CGT benefit over the next say 3 years.

Thanks
 
landlord said:
I understand this 7 year no CGT benefit for me reduces from year 2021.
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Doesn't this explain it?

Property acquired between 7 December 2011 and 31 December 2014

This page explains relief available for land or buildings acquired between 7 December 2011 and 31 December 2014
www.revenue.ie www.revenue.ie
Property owned longer than seven years

You can get partial relief if you have owned the property for more than seven years.

To calculate the partial relief, divide seven by the number of years you have owned the property. This will give you the proportion of the gain that is exempt.

For example, if you owned the land or buildings for ten years, the gain will be reduced by seven-tenths (7/10).
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landlord said:
But by how much does the benefit reduce and if I am earning €11,000 a year from it after ALL tax and expenses
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Why do you think that the CGT calculation would be in any way impacted by any ongoing income received from the property?
 
ClubMan said:
Doesn't this explain it?
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Brilliant thanks clubman I was actually looking for that post for ages but my search function wasn’t working properly.

ClubMan said:
Doesn't this explain it?

Property acquired between 7 December 2011 and 31 December 2014

This page explains relief available for land or buildings acquired between 7 December 2011 and 31 December 2014
www.revenue.ie www.revenue.ie


Why do you think that the CGT calculation would be in any way impacted by any ongoing income received from the property?
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The CGT calculation would not be impacted by the income received.

I was hoping someone can give me the ratio of
RIP profit after sale/rental income for 2023,2024 and 2025 to see how much I loose out by delaying the sale.
To be honest I should be able to work it out now that you have retrieved that old thread. Thanks
 
landlord said:
I was hoping someone can give me the ratio of
RIP profit after sale/rental income for 2023,2024 and 2025 to see how much I loose out by delaying the sale.
Click to expand...

To do this that someone would need to know what capital gains or losses will accrue on the rental over the next three years
 
I am in the same kind of situation. I have estimated that considering a growth of 2/3 per cent over the next few years, it is not really worth keeping my property for rental in terms of gains on the property. I have probably maximized my gain already as each year will cost me in terms of CGT. This cost will be as much as the gain in a moderate growth situation. (Basically, in my calculations, I had 4/5k of CGT each year I keep my property in the next few years with moderate growth). With my low rental, it is not really worth it. However, at this stage, we have decided to keep the property as we have old teenagers and our property is in Dublin. We see it as a place they could move to in the next 5 years. We thought long and hard about selling earlier this year as it was vacant. We didn't. However our new tenants have indicated they will probably stay 12 to 18 months. This would allow us to review our situation if needed. We realised it is probably not really worth it for us but keep it so that our children might have somewhere to live independently as young adults.
 
llgon said:
To do this that someone would need to know what capital gains or losses will accrue on the rental over the next three years
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That's not how it works. The key variables are the price achieved on eventual sale of the property and the length of time that elapses in the meantime during which it is not used by the owner as their PPR.
 
After 10 years
your cgt is
7/10 33%
Profit 140k relief on 70%, tax on 30% = 13.8k

11 years
Relief on 7/11 , tax on 4/11 = 17k

12 years
Relief on 7/12, tax on 5/12 = 19.4k




14 years
tax on 7/14 x 140 x .33 = 23.3k
 
Last edited:
Just checking I am doing the calculation correctly…..
Assuming my gain from selling the property is unchanged each year at €150,000…
Sell in year 7
7/7 x150,000 is exempt from CGT

Sell in year 8
7/8 x150,000 = 131,250 gain is exempt from CGT
So CGT paid on gain of €150,000 - €131,250 = €18,750 (-€1250 gain CGT threshold) = €17,500 x33%.
(€5,775 CGT)

Sell in year 9
7/9 x150,000 = 116,667 gain is exempt from CGT
So CGT paid on gain of €150,000 - €116,667= €33,333(-€1250 gain CGT threshold) = €32,083 x33%.
(€10,587 CGT)

Sell in year 10
7/10 x150,000 = 105,000 gain is exempt from CGT
So CGT paid on gain of €150,000 - €105,000= €45,000(-€1250 gain CGT threshold) = €43,750 x33%.
(€14,447 CGT)
 
T McGibney said:
That's not how it works. The key variables are the price achieved on eventual sale of the property and the length of time that elapses in the meantime during which it is not used by the owner as their PPR.
Click to expand...

Which is exactly what I said
 
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