Selling shares at profit - a good time to sell negative equity house?

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amgd28

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Hi,
I'm due to sell a small number of shares in my company to fund a deposit on a family home - the gross price would be approx 300k. For CGT purposes, the base price would be negligible (approx 10k)
I also own an investment property in negative equity, which I would love to sell (bought in 2006 for 380k, likely sale price would be approx 150k, current mortgage is 300k)
My question is - should I look to sell the investment property prior to doing the share transaction - would this mean that my net CGT liability would be much lower?

E.g.: Loss on investment property = 230k, Gain on shares = 290k. Net taxable gain = 60k. CGT liability = 60k x 35% = 21k

Any advice on this?
 
CGT on shares : €290k@35% = €101k

Less CGT losses €230k@35% = €80k

So you save €80k in CGT by selling the property before selling the shares or selling it in the same tax year.

However, you should look at the profitability of the investment property. If you have a cheap tracker, it's probably a very profitable investment and so the current value is not terribly relevant.

For example

Rental income| €10,000 |
Interest on current value |€ 2,000 |€150,000 @1.5%
Rental profit|€8,000
This would argue for retaining the property.
 
Hi Brendan,
I appreciate the analysis. Yes, the property is not a bad investment for a potential buyer. For me though, time spent maintaining the property and sorting out tenant is a drain on my time.
My time is better spent building up my business, which is a far better source of wealth creation for me than houses. As I travel a lot internationally and have a family of 3 young girls, it would be far simpler for me to take the hit on selling the negative equity rental property and simplify my life.

The main query really though is this - if I do the share transaction say in October, but don't sell the investment property until February, then I am liable for full CGT on the shares and I cannot retrospectively apply a CGT loss subsequently gained on the sale of the negative equity property?
 
amgd28 said:
if I do the share transaction say in October, but don't sell the investment property until February, then I am liable for full CGT on the shares and I cannot retrospectively apply a CGT loss subsequently gained on the sale of the negative equity property?
Click to expand...

That is correct.

You better put the house on the market immediately if you want to sell the house by the year-end.

Brendan
 
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