CGT Query

U

unsure

Guest
I'm selling my house. I had originally bought with my ex partner for 540k, we lived there for a year and I bought her out for 100k. I then rented out the property for three years - how can I calculate the CGT? Is the cost of acquisition 540 or 640? And will I get relief for having occupied the property for a year?
 
The cost will be 270 (plus any legal fees, stamp duty etc).

As you lived in the house for one year and are deemed to have lived in it for the final year of ownership, half of the gain will be exempt from tax (on the basis that it was owned for 4 years in total).
 
Nige said:
The cost will be 270
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Incorrect. The cost will be (50% of the market value when originally purchased =270) + (open market value of remaining half-share when bought out for €100K)

You really need professional advice on this as errors in calculation of liability can have drastic consequences.
 
My feeling is that there are some salient details missing here.

You bought the house together for 540 and then you bought your ex partner out for 100K. That's hard to figure out.

My guess is that at the time your bought your partner out there was 200k equity in the house and you paid her half of this = 100K
If this is the case then you presumably took on her share of the mortgage as well. What we really need to know for CGT purposes is what was the Gross value of your partners half when you bought it out.I presume she did formally sell her half of the house to you and the conveyancing was carried out by a solicitor ?

I hope I'm making sense

Best wishes
 
ubiquitous said:
Incorrect. The cost will be (50% of the market value when originally purchased =270) + (open market value of remaining half-share when bought out for €100K)

You really need professional advice on this as errors in calculation of liability can have drastic consequences.
Click to expand...

My figures were based on this originally used by the OP (who has since edited the post and figures).

The original post claimed that the OP purchased the house for 240k and later paid an additional 30k to their former partner.
 
Also, if you paid your entire stamp duty liability (including any clawback for renting within 5 years if FTBs) then this is also deductable.
 
Nige said:
My figures were based on this originally used by the OP (who has since edited the post and figures).

The original post claimed that the OP purchased the house for 240k and later paid an additional 30k to their former partner.
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Fair enough. Its a bit odd alright that the figures were changed in the way that they were. Someone acting the maggot?
 
ubiquitous said:
drastic consequences.
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Really?

Does the buck not stop with the solicitor to find out what the CGT would be?

Comments like 'drastic consequences' make people think of an oppressive governing body. Surely if the facts are presented correctly there will be nothing to worry about?
 
"Does the buck not stop with the solicitor to find out what the CGT would be?"

Why the solicitor? The liability is the tax payers, not the solicitors. Most solicitors will not undertake tax work but will simply advise the client to be aware that they have a liability, when any CGT is likely to be due and payable and direct them to talk to their own accountant.

mf
 
peterwilson said:
Really?

Does the buck not stop with the solicitor to find out what the CGT would be?

Comments like 'drastic consequences' make people think of an oppressive governing body. Surely if the facts are presented correctly there will be nothing to worry about?
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Yes, inadvertent underpayment of CGT can have drastic consequences for an individual. And yes, the Revenue can indeed be thought of as "an oppressive governing body" as they have very strong powers at their disposal to enforce compliance with tax laws, including initiation of prosecution proceedings that can result in imprisonment and swingeing financial penalties. Anyone with even a basic understanding of tax will be aware of this - and no, one cannot seek to evade one's tax responsibilities by trying to pin the blame for non-compliance on professionals. The buck stops with the individual.

By the way, many solicitors are neither qualified nor competent in relation to CGT and as such their advice on CGT liabilities should not be relied upon unless the matter is extremely straightforward and the amounts involved are small.
 
peterwilson said:
Really?

Does the buck not stop with the solicitor to find out what the CGT would be?

Comments like 'drastic consequences' make people think of an oppressive governing body. Surely if the facts are presented correctly there will be nothing to worry about?
Click to expand...


As far as the revenue is concerned the buck starts and stops with the person who owes the tax! And as far as Im concerned in dealings with the Revenue you might as well assume that they are an "oppressive governing body" as while in fairness they can be fine to deal with their powers in this country are awesome if they chose to use them!

Also generally speaking cgt is not a solicitors issue..a solicitor may give advice but most will include a caveat suggesting accountancy advice,also in very few cases do solicitors become involved with the collection of cgt unlike say stamp duty or even cat.
 
In relation to Revenue Audits, this charter has largely been superseded by the much stricter Code of Practice for Revenue Auditors.
 
Clubman,
If you quoted the rest of my sentence I think it would be clearer that I was not knocking the Revenue but really I dont think anyone can deny that the Irish tax authorities powers are vast (and they are not to be messed with)and the point I was making to the previous poster is that its not enough to assume that the buck stops with your advisor.
Anyway(and hear comes the plamas)..this is a great site and I appreciate you have to keep us on the straight and narrow
 
If the OP fills out the CGT form incorrectly and pays an incorrect amount to the revenue do they not check it and then tell him he's made an underpayment and vice a versa if he made an overpayment. Would he have to pay penalties if he made a genuine error?
 
It seems a total grey area to me.
How can facts be proven about CGT anyway?
I mean if someone lives in a house and then moves out (back to parents) and rents it out for a few years are they then liable for CGT?
 
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