CGT on non PPR house

johnny2shoes

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I am an OAP with little income other than the pension. Am considering selling a house which is rented and am told is worth €220k approx.
The house new cost €50k in 1990 so it looks like a hefty CGT hit unless I can soften the blow.
Hoping somebody here can wise me up on this indexing thing in relation to the original 50k.
How is this index calculated?
I also carried out improvements over the years like concreting the large front area and other stuff like garden shed and wiring same for electricity but didn't keep receipts for about 10k.
I know I read somewhere here while searching that this expense might well be allowable so
would appreciate any advice.
Sorry if this is a bit longwinded.
 
Did the cost of house cost 50K in euro or irish pounds?

Assuming Euro
Cost of House 50,000
Stamp Duty
Legal Expenses
For the sake of argument lets say stamp duty and legal expenses is 5.000

Convert to Euro Rate .787564 69,836

Apply indexation

Depending on when the house was purchased in 1990 if bought before 5/4 apply 1.503
if bought after 5/4 apply 1.442

Do the same for the extension I think auctioneers can give a value of the cost of the extension

Indexation stopped in 2003

Computation will look something like this
Sale of house 220,000
Less Legal & auctioneers fees say 10,000
210,000

Less Cost of house incl Indexation (say) 105,000
Extension incl Indexation (say) 15,000
120,000
Subject to Tax @ 33% 90,000
Tax Bill 30,000


PS Hope you made your annual tax returns to revenue in relation to rental income
 
The 10K does not sound like it is allowable. It has to be 'capital' expenditure. The simplest way to think of it would be to consider whether it is a 'repair' or an improvement. Adding on say a conservaory would be capital. Converting a garage into a bedoom also.

If that 10K was deducted for tax purposes in relation to income tax on rent than for sure it is not allowable.

Was the house ever the OP's home. This will reduce the CGT.

There is also a personal deduction tax wise for the OP and his spouse. Another couple of grand to be deducted there.

The costs associated with purchasing can also be indexed.

At that time the tax year was split April to April so it depends on what time in the year what indexation will apply.
 
The OP needs proper & specific professional advice. With CGT at 33% the risks attaching to getting it wrong are serious. The €10k may well be allowable if they constitute improvements (which seems the case) but that is only one of the issues that needs detailed examination.
 
Many thanks 'asdfg', Bronte and T McGibney.
No I never lived in the house even if that was the intention originally.
Yes the rental income is returned annually in our tax returns.

I really appreciate your (plural) help and can now chase down the exact time of purchase and legal fees etc
as this is relevant for proper calculation of CGT liability.

It would have been Irish punts in 1990 AFAIK so that's another calculation ?

Good to know there are helpful people about still. Great site this.
 
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ASDFG...........you say Indexing stopped in 2003.
Does that mean no more relief for those who purchased property after that date?
Seems like a heavy hammer and so sudden.
Was it replaced by some other system?
 
ASDFG...........you say Indexing stopped in 2003.
Does that mean no more relief for those who purchased property after that date?
Seems like a heavy hammer and so sudden.
Was it replaced by some other system?

Honestly I wouldn't call it a relief but it is a very hefty tax. I read somewhere recently that the tax is actually higher than one thinks because the inflation on the original purchase price is not taken into account. That was the reason for the index. And no it was not replaced by a new system.
 
There's loads of info on revenue.ie. If you're not used to doing your own taxes I suggest you use a professional to do the calculations and to submit the return. It's easy to make a mistake.

Actually I see now a poster earlier did much of it for you, and they have the euro rate. How about you doing it on here and it will give you a better idea of how much you will pay.
 
Is it not burned into your brain??? 0.787564... I'll take that number to the grave!

I thought I did quite well to remember it at all ! I always think of it as 20 cent less. Don't forget I had to do another currency as well as IEP. Thank goodness for the Euro, made life so much easier.
 
Think I'll get a lad with a striped suit to do the calculations if and when the sale takes place. The old sums and me never did shine.

Another thought has entered my old head now. Where can I get the best return for this pot of money of €180/190 K?
Will need some for income and long term investment isn't really an option at my age.
 
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A few things that spring to mind to pass onto your accountant if relevant:
- Assume you have the property registered, paid you property tax, income tax etc
- are you married, you will both have an allowance
- Have you any capital losses which can be out against the gain (banks share, previous property etc)
- Was the property ever used as your private home as you can factor this in also.
- all you expenses from purchase & sale are allowable (estate agent, stamp duty, advertising etc)

We had a similar situation and when we factored in some of the above, our bill came down significantly.
 
Thank you sah h,

Married.yes and all taxes paid
No capital losses to use
No...never used as our residence

I will of course try to chase down the initial legal costs but it was 25 years ago.........ouch
City Hall will have Stamp Duty details I presume?
 
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