Capital Gains Tax

Hi,

I'm after some help.

My sister in law and her husband reside in Ireland but have a house which they rent out in UK. They are looking to sell both houses and purchase another house in Ireland.

I understand that any CGT on the UK house is liable in Ireland. As they meet the criteria of HMRC for non-residency no CGT is liable in UK.
I also understand that no CGT is liable on their Irish home as it is their main home.

Is it possible to offset some (or all) of CGT on the UK house against the purchase of the new house? The house they intend to buy still needs second fixing, etc. They will have to pay stamp duty. Could this be offset against it?

If the above can be done I am sure that the CGT will have to be paid in the first instance and then any refund made when submitting tax return. Is this correct?

Any feedback would be much appreciated.

WestEndGirly said:

Hi,

I'm after some help.

My sister in law and her husband reside in Ireland but have a house which they rent out in UK. They are looking to sell both houses and purchase another house in Ireland.

I understand that any CGT on the UK house is liable in Ireland. As they meet the criteria of HMRC for non-residency no CGT is liable in UK.
I also understand that no CGT is liable on their Irish home as it is their main home.

Is it possible to offset some (or all) of CGT on the UK house against the purchase of the new house? The house they intend to buy still needs second fixing, etc. They will have to pay stamp duty. Could this be offset against it?

If the above can be done I am sure that the CGT will have to be paid in the first instance and then any refund made when submitting tax return. Is this correct?

Any feedback would be much appreciated.

Click to expand...

CGT is charged on the total amount of all capital gains in a tax year, net of any capital losses either incurred in that year, or carrying forward from earlier years.

Therefore the gain liable to CGT on the UK house can only be reduced by either: a loss carrying forward from a disposal of asset(s) in an earlier year, or, a loss arising from a disposal(s) in the same year.

So the simple answer to your question is that there is no provision to allow the gain to be mitigated in the manner you have suggested.

However, if they ever occupied the UK house as their PPR they may be entitled to PPR relief on it (but bear in mind that any period they lived in the UK house means they couldn't have been occupying the Irish house as their PPR). This is just an off the cuff suggestion, as I don't have the time to confirm that one can claim PPR relief on foreign owned property, but someone else might confirm or refute that...

Thank you mandlbrot,

I'll do some search on PPR relief. When they got married they lived in UK house and bought Irish house at a later date. They rented Irish one until they moved back for good.