Can I set the capital loss on my PPR against profits in my rentals?

[Patgdirector]

My primary residence that I am living in at present which was purchased in 2006 for €320k. If I sell today €200k. I have a few other rentals.

I have purchased a new house to be my primary residence, my issue is if I sell the old primary I will have a capital loss of 120k, I dont want to loose this loss how do I take it forward with me.
If I rent it for 18 months?
I have read the revenue web site and looks like I can't is this true?

 

[Joe_90]

On the basis that a gain on a PPR is exempt from CGT a loss is also not allowable.

Any period on non occupation exceeding 12 months would be taxable so if you rented it for 18 months and the sold it, 6 months / 138 months x the loss would be allowed.

 

[jpd]

In short, you can't.

Any gain or loss on your principal private residence is discounted for the purposes of CGT.

If you rent your house out, then part of the losses become allowable but only in proportion to the period it was rented out.

For example, if you rent it out now for 18 months and then sell it in Jan 2018 for 220k say

Period of ownership: 2006 - 2018 or 12 years or 144 months
Period of PPR 2006 - 2016 or 10 years
The last 12 months of ownership are considered as PPR so the period of non-PPR is 6 months

Capital loss = 100k

Allowable loss = 6 months / 144 months = 1/24 so allowable loss is 100/24 or just over 4k

 

[Brendan Burgess]

So it's more tax efficient to keep your ex home as a rental than to keep one of your other properties of similar value. Any gain in the pure rental will be subject to CGT.

If you rent out your home, you will not pay any CGT on the increase in its value up to the price you paid for it, €320k.

Even after that, the CGT is reduced significantly.

Let's say you keep it until 2026 and it increases from €200k to €400k in that time.

Sales price: €400k
Cost: €320k
Gain: €80k
PPR relief: 50%
Taxable gain: €40k

(The figures are slightly different due to the one year post occupation exemption, but the principle is the same.)

If you have a rental property today worth €200k and it increases to €400k, you will have €200k of a taxable capital gain. (Or you will use up valuable CGT losses if you paid more than €200k for it.)

Brendan