CGT on rented property

M

morningperson

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I've a property I bought as a FTB over 5 years ago.
I've been an owner-occupier of the property since then.
I'm thinking of renting it out, and renting myself, not buying another place or anything.
Because I'm renting it out I presume it is seen as an investment then (does this happen a year after you start renting it?).
So if I sold it 2 years later would I have to pay Gapital Gains on the appreciation on the amount it increased in value for the whole period I owned it (at that stage over 7 years)?
 
I'm open to correction here. You lived in it for five, the rent it for two. You would pay CGT on the increase in value from Year 6 to 7, as you have a 12 month "grace period" after it is no longer your PPR.

Someone else will be able to answer definitively, I'm sure.
 
spinal_tap said:
Someone else will be able to answer definitively, I'm sure.
Click to expand...
I'll happily be that person. Yes, the details given are nearly correct.

The true calculation is 6/7 of the total gain in value, for the example given.
5 years as OO + 1 year grace / Total years as owner = 6/7
Total gain = Sale price - Purchase price - allowable expences (sale costs, CGT exemption, etc. etc. - see Revenue for full details on allowable expences when calculating gain)

You are given a 12 month grace period for CGT calculations (technically a grace period to allow for sale etc. but available to everyone - I believe it may only be releated to the final 12 months but I wouldn't state that with any authority, flick through the Revenue site for exact details if needed).

As you've had it for over 5 years no SD clawback would/will be due, but you already seem aware of this one.
 
Satanta said:
The details given are correct.
Click to expand...

They're actually not. The increase in value between year 6 & year 7 is irrelevant, contrary to what was suggested above. Look through recent AAM threads for repeated instances where this question was posed and answered. Get specific professional advice on the tax implications before going ahead with a sale.
 
In the situation you ouotlined above, the CGT position is as follows

Caluculate

Total Gain = (Selling Price-Cost of sale) - (Original cost + costs of purchase)

Period of ownership = 7 years

Period as PPR = 5 years plus last 12 months of ownership (deemed PPR) = 6 years

Gain exempt from CGT = Total Gain * 6 / 7

Taxable gain = total gain - exempt gain - annual allowance of 1270
Tax due = Taxable gain x 20%

The periods would need to be worked out as months, not years
 
jpd said:
The periods would need to be worked out as months, not years
Click to expand...
This question has been asked in the past. Is there anywhere that states that it should be in months and not weeks/years/days?
 
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