Capital gains tax on investment property

Hi All,

I am looking for some advice on CGT on an investment property , any advice would be most appreciated.

At the moment we have 2 properties , a primary residence and an investment property.

1) Primary residence (Home)
Loan outstanding 215k
Property current value 300k

2) Investment property (BTL)
Loan outstanding 230k
Property value 220-225k max. possibly 210k worse case scenario.

The investment property was initally our primary residence (we bought in 1999 for 120k Irish pounds) but we re-mortgaged and switched this to investment property in 2006 for around 240k (spilt term - interest only and capital, 200k & 50k respectively).

For the last 3 years its on capital only after some re-structuring with the bank due to inability to make the full payments when the interest only ran out. There is now no problem with the repayments but the tax return bill (revenue) can run into the thousands each year, nearly 5k last year and it is absolutely killing us (wife , 3 kids), its taking any spare cash we have. There was never any re-structuring with our current home mortgage since I'm thankful to say and repayments of around 1200 are just about manageable with 12 yrs left to run on that, the way current interest rates are of course.

My question is if we sold the BTL would the sale price of the BTL when calculating the CGT be offset against the 240k mortgage (this was effectively a new mortgage taken out when buying our family home using the old primary redance , now the investment property as leverage). In this respect would we would not be exempt for CGT? Or, is the CGT calculated using the original price of the now investment but once primary residence?? Its very confusing !!

Any advice would be welcome, as I said the tax returns are crippling us each year.

We lived in the investment property (once main residence) for 6 years and in our current home 8 years. What would I be liable to pay in CGT?

Two issues arise.

1. For CGT purposes the Gain is the proceeds approx €220k less selling expenses less ( the original cost £120k + acquisition costs) x 1.193.

Because you lived in the house as your PPR you get those years plus the last 12 months so approx 8/15 exempted. Less the annual exemption x 33%

2. I hope you only claimed the amount of the remortgage interest in relation to the original loan outstanding as a rental deduction.

Hi Joe,

Thanks for the advice much appreciated.

*Over the last few years we claim from the 240k (investment mortgage), what's the consequences?

**Also, what is the multiplier 1.193 in relation to?