When does my home become an "Investment property"?

L

Lozzz

Registered User
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Hi, I learned today an interesting fact re my tax liability from renting my present home after I move on to bigger and better. (Still not decided) I am told that revenue will look at the duration of ownership, cost of purchase & value at time of selling and, draw a straight line as it were between the two values from the two dates and charge capital gains on any increase in said value from time of renting out. Follow me so far? Someone else told me that tax would only be charged on the increase in actual value from the time of renting the property. This sounds fair if a little open to abuse by manipulating the values. Thing is, this place was a dump when I bought it and my efforts have tripled the value (so my auctioneer tells me :) ) in the 7 years since. So now I need to do some serious maths to determine if renting out could be a good financial decision as the increase in value from here on would be just normal house inflation rates.
Thanks to anyone who has got this far...... I`m long winded I know!
Anyway my questions are...
  1. Which/What method of calculating tax correct? .
  2. What if any types of expenses can be written off to offset my tax liability, like maybe €2000 for the well etc?
  3. Do I rent or sell?
 
Re: When does my home become an "Investment property"??

Which/What method of calculating tax correct? .
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Both of the approaches you outline are incorrect and and whoever told you about these this is misinformed. When a property that was a PPR and also rented out is sold then part of the resale gain is assessable for tax as follows - e.g. owned for 10 years, PPR for the first 6, rented for the remaining 4 = (4-1)/10 = 30% of any gain is assessable for CGT. The gain from the time of renting to eventual sale is NOT relevant.

What if any types of expenses can be written off to offset my tax liability, like maybe €2000 for the well etc?
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See the FAQ.
Do I rent or sell?
Click to expand...
See this key topic and the many others on the same issue.
 
Re: When does my home become an "Investment property"??

e.g. owned for 10 years, PPR for the first 6, rented for the remaining 4 = (4-1)/10 = 30% of any gain is assessable for CGT.

Where does the -1 come from??
 
Re: When does my home become an "Investment property"??

After vacating a property as your PPR the first year is exempt from CGT even if the property is rented out. By the way - I also meant to say that if you rent a former PPR out within five years of purchase then a clawback of stamp duty will also apply but I take it that this is irrelevant to your situation.
 
Re: When does my home become an "Investment property"??

Only back on line now. Thanks for the info Clubman.
 
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