How much clawback and SD is owed - Confused Please

[polo1]

Sorry I know there has been numerous threads about this but I am very much confused about this and would appreciate the following clarification.

I have been living in my PPR for just over 2 yrs. Planning on renting it out at end of yr as currently building new PPR. Only planning on letting it for 1 yr approx. no longer.

I am just trying to work out what I will owe in terms of Stamp Duty and clawback once I sell it and if its worth my while holding on to it.

PPR bought for 365K May 2004. Current Market Value 500K. If I was to hold on to it for another year and rent it for €1100 per month and sell it say in Dec 2007. (costs would be in addition about €600 per month for me - top up to mortgage and tax and fees etc).
Estimated house value at time of Sale would be €550K acccording to EA....(know the risks).

So questions are please?
1. When is stamp duty and clawback owed. Are both of these owed or is it just one of them that I pay. Is it the day I move into the new PPR. Is it a once of payment or is it calculated on the amount of time you keep it after you bought it.
2. How much stamp duty and clawback is owed.
3. Will I be exempt if I sell within 1 yr of moving out or not because I will received rent for property.
4. Would I be better off selling this PPR now.

Thanks guys. I know I am duplicating but still cant work it out.

 

[Baloney]

There are 2 things that I am aware of
Put simply they are..

1. Stamp Duty Clawback - when you bought the house you paid less or no stamp duty because you were buying as a PPR. If you bought as an investor you would have paid more Stamp Duty. If you rent out the house within 5 years you must pay the difference in the Stamp Duty. You owe it as soon as you recieve rent. I don't think it matters that you will only rent it for a year.

2. Capital Gains Tax - if you rent out the house then it is viewed as an investment property, not your PPR so when you sell it you must pay Capital Gains tax on whatever profit you make. 20% at present.
Captial Gains Tax I think is applied proportionally so if the house was an investment property for 1/3 of the time you owned it then you only pay the tax on 1/3 of the profit or something like that.

and obviously you would pay income tax on whatever rental income you get less allowable expenses etc.

 

[bacchus]

Questions 1. 2. 3.
On the assumption that you rent your current PPR for no more than 1 year while you have moved to new PPR, and then sell your former PPR in fact 1 year period, then there is no SD due, no clawback, no CGT.

Question 4.
This is really up to you to decide. Selling now would be the easiest option (you know present market value, no hassle getting tenants, etc..).
But
- property price can still rise over the next 12 months.
- from my experience, it is very easy to rent few months at the time. Typical target would be people awating completion of their house and do not want to get into 1-year lease. In fact, these will even pay a premium for short lease.

[Edited: post crossed with Baloney, and stating the opposite. Is there a qualified judge around? ]

 

[Howitzer]

No stamp or cgt liabilities if you sell within one year. However you are still liable for tax on rental income and need to register with the PRTB, irrespective of whether you intend to sell within a year.

 

[Baloney]

[Edited: post crossed with Baloney, and stating the opposite. Is there a qualified judge around? ]

whoops! yes, you could be right. I never heard of that 1 year thing. Where did you get that from?

 

[polo1]

Thanks for this.

Just want to make sure I am correct then please.
If I keep and rent out, pay taxes on rent etc, for less than 1 yr and then sell I will not be liable for either CGT or SD clawback - Is this correct?

If I do decide to keep for say 5 years and 2 of those years are rented then is the calculation as follows say value is 550 at time of sale - OPP 365 = 185K = 5-3-1=1 /5 = .2 Is that then equal to 185*.2 * 20% = 7.5K? Am I also liable for SD at this stage of 6%? Is this on the original price or on the current value?

Thanks guys appreciate your help with this.

 

[bacchus]

whoops! yes, you could be right. I never heard of that 1 year thing. Where did you get that from?

no problem. Read this here on AAM over the months..

 

[elcato]

Stamp duty is on the original price you paid on the house and the rates that were applicable at that time. So for example if you paid 3% as an owner occupier on 365k you will owe a further 3% of 365k. (I'm assuming that the OO rate was 3% at the time and that the Investor rate was 6%). Interestingly though when does an owner occupier make the decision that he is not gonna sell. Say he claims that he is gonna move but rent it out in the meantime while he's waiting. Is the stamp duty not due until after a year then after he makes a decision to keep it ? As I understand SD is payable from the date the property is first let and there are penalties for not doing so.