Getting out just below the top.

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powernap

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I have two residental properties at the moment. One bought in 2003 the other bought this year. Capital appreciation on 2003 property and subsequent equity release purchased 2006 property. I purchased the 2006 property as a very short term investment based on projections of sustained growth for 2006 with possible slowdown in 2007. I felt i could turn a 20-25k net profit in under a year which definitely beats working for it. Already i have met this target.
Right now i feel it is time to sell just below top especially when i hear my friends talking about property in terms of you can't lose, it can only go up, i'm 20k richer than i was last week etc. (We are all middle twenties and grew up in an era where hand-me-downs werent even a consideration).
Now i want to sell at least one of the properties this year as i feel the era of surging prices is almost over with inflation and capital growth equalisation just around the corner.

If i sell 2003 property i know i wont pay CGT as it is my PPR. Do i pay any tax for the profit which will be made?
Does the 2006 property then become my PPR. If so can i sell that without paying CGT? Is there a time period associated with this?
 
powernap said:
If i sell 2003 property i know i wont pay CGT as it is my PPR. Do i pay any tax for the profit which will be made?
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If it is your PPR and was never rented out then no CGT liability arises.
Does the 2006 property then become my PPR.
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Only if you actually move into it.
If so can i sell that without paying CGT?
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If it is/was ever rented out then some portion of any eventual resale gain will be assessable for CGT. For example if you rented it out for a year and then moved into it as your PPR and sold it 5 years later then 1/6th of any gain would be assessable for CGT.
 
ClubMan said:
If it is your PPR and was never rented out then no CGT liability arises.
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I am under the impression that it does not matter if it was rented out or not. If there was a period in which you owned it but had another PPR then you will have to pay that portion of the CGT.
I would love to hear that I am wrong because I will be selling my PPR later in the year but expect to pay some tax because I moved out of it for about 3 years (did not rent it out) and I availed of the exemption when I sold the house that I lived in for those 3 years. If I now availed of full exemption on this house then I would be effectivly getting a double exemption for those 3 years.
 
I think you would also be entitled to an additional years exemption in other words you only pay for 2 years CGT. Not sure if this applies if you leave and return later and then sell.
 
thank you for the replies.

i did pay stamp duty on 2006.

From what i understand if i sell 2003 then 2006 becomes my PPR as long as i live in it. Is there a minimum time period for a new residence to be classified as your PPR and be ready for subsequent sale?

Alternatively (similiar to woods)if i dont sell 2003 and leave it idle, move into 2006 this then becomes becomes my PPR.
What is the status of 2003 if i then sell 2006.
 
I have heard that 6 months occupation would be a minimum to qualify for PPR relief but I reckon it depends on the circumstances of each case.

I suspect that, if you changed house every 6 months and managed to make a gain each time, the Revenue would not take a kindly eye to you claiming PPR reflief each time.
 
jpd said:
I suspect that, if you changed house every 6 months and managed to make a gain each time, the Revenue would not take a kindly eye to you claiming PPR reflief each time.
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I see no reason why. You'd probably be incurring a rather large stamp duty charge on each transaction, not to mention estate agent / legal fees. If you're still making a profit after that then fair play to you.

The stamp duty that you do pay would in all probability be much larger than any possible CGT liability over such a short period.
 
Howitzer said:
I see no reason why. You'd probably be incurring a rather large stamp duty charge on each transaction, not to mention estate agent / legal fees. If you're still making a profit after that then fair play to you.

The stamp duty that you do pay would in all probability be much larger than any possible CGT liability over such a short period.
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There would come a time when the tax man would say that you were conducting a business (buying and reselling houses) and would ask for his cut. I do know of someone who is under threat of that at the moment.
 
Everyone is giving advice on the best way to sell and the tax implications, I am surprised no one has suggested holding on to both properties for a while longer, at least till the SSIA fuel is exhausted. From the Irish independent today the 19th May page 6 Edel Kennedy's article (House prices Soar by 14pc), she quotes from David Duffy of the ESRI "The view has been that prices wont grow at quite the same rate in the next 12 months, but we're still talking of growth in the region of 10pc".
Well a forcast of 10pc in the next 12 months, the SSIAs and my gut instincts are more than enough for me to hold on to my investment properties for the short term. I would suggest if your property is in a desirable area and rental demand and capital appreciation are good then think twice about selling for a while. "Powernap"....How much would a 10pc increase add to the value of your 2 properties??? I am still riding on the back of the wave my self, but the truth is I dont know for certain how much energy it has left........??
 
landlord said:
From the Irish independent today the 19th May page 6 Edel Kennedy's article (House prices Soar by 14pc), she quotes from David Duffy of the ESRI "The view has been that prices wont grow at quite the same rate in the next 12 months, but we're still talking of growth in the region of 10pc".
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well, if it's printed in the newspaper, it is to be true and guarantee to happen :)
 
If only that article was printed in the Times and not the Indo !!! My thread would have had more credibility :)
 
landlord said:
Everyone is giving advice on the best way to sell and the tax implications, I am surprised no one has suggested holding on to both properties for a while longer, at least till the SSIA fuel is exhausted. From the Irish independent today the 19th May page 6 Edel Kennedy's article (House prices Soar by 14pc), she quotes from David Duffy of the ESRI "The view has been that prices wont grow at quite the same rate in the next 12 months, but we're still talking of growth in the region of 10pc".
Well a forcast of 10pc in the next 12 months, the SSIAs and my gut instincts are more than enough for me to hold on to my investment properties for the short term. I would suggest if your property is in a desirable area and rental demand and capital appreciation are good then think twice about selling for a while. "Powernap"....How much would a 10pc increase add to the value of your 2 properties??? I am still riding on the back of the wave my self, but the truth is I dont know for certain how much energy it has left........??
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oh oh, you're getting greedy :D .All the experts here will tell you never try and time the markets !.
 
Fair play, two properties mid twenties, you've done well.
As regards timing, this is something I think you've got to decide for yourself. The Irish market over the last 10 years has confounded everybody and nobody has called it right - 2 journalist in particular have been crying wolf, one from 2001 to 2003 (Celtic Tiger originator) and another politician/journo for the last 18 months, if you had stayed out on the advise of these experts, what would you have. Going forward, some thoughts, do you need the €20k, what would you do with it, if interest rates rise and the property market stagnates/dips, can you afford to hold both properties for 5/10 years?
 
jpd said:
I have heard that 6 months occupation would be a minimum to qualify for PPR relief
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Why would 6 months be necessary as a minimum period of occupation to grant PPR status? If your genuine permanent residence is in a particular property, then surely overnight, it becomes your PPR?
 
In most cases, yes, but there are circumstances where it might not be accepted - for example, if you own a house, live in it a your PPR, then go abroad for work as an employee and then come back - as long as the house becomes your PPR on your return, ALL of the capital gain is exempt. In this example, living in the house for one day would not qualify it as your PPR - a longer period would be required
 
take your point landlord on holding on a bit longer but the thread is specifically called 'getting out just below the top'. in my original post i said it was my friends who came up with statements like it can only go up etc. I can also attribute some of those statements to my mother. She has given me plenty of sound advise down the years on loads of difficult subjects but i had a Joe Jackson/shoe shine boy moment when she blurted it out.
As for holding onto the places for 5-10 years and seeing what happens i have no interest.Property should have a reasonable return in that period but wheres the thrill in that.

Article below is well worth a read.

[broken link removed]
 
I am surprised no one has suggested holding on to both properties for a while longer, at least till the SSIA fuel is exhausted
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There's a feeling amongst the 'experts' on here that the SSIA's have been spent already, that the with the impending SSIA boom as predicted by da meeja, people went out and purchased early, borrowing more on the strength of the ssia, this is one way of explaining the irrational increase in prices in the past 6 months.
 
Glenbhoy said:
There's a feeling amongst the 'experts' on here that the SSIA's have been spent already, that the with the impending SSIA boom as predicted by da meeja, people went out and purchased early, borrowing more on the strength of the ssia, this is one way of explaining the irrational increase in prices in the past 6 months.
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This is supported by the retail sale figures for April - well down on expected - might be that the interest rate rises are finally starting to bite also
 
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