Can someone claim a CGT loss on their family home if they worked abroad?

Brendan Burgess

Brendan Burgess

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House bought as family home for €1m in 2005
Owners moved abroad in 2010 but kept family home which was occupied by two adult sons. No rent charged.
They did not own a home abroad.
Selling now for €500k.

If it were a capital gain of €500k, they could claim the family home exemption and pay no CGT.

So I presume that they can't claim a loss for CGT purposes?

They have significant other Capital Gains, so they could use a CGT loss.

Brendan
 
Sophrosyne said:
Do you mean can they set the loss on the PPR against other gains?

If so, they cannot.
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Are you sure it was their PPR at the time of the sale?

It was hardly their PPR if they haven't lived there for 5 years and the property was not occupied by their dependants during this period (I am assuming that the two adult sons were not their dependants during this period). I don't think the fact that they didn't own a property abroad should change this analysis.

If it wasn't their PPR then presumably they could carry forward the losses for CGT purposes. No?
 
That is the key question.

Is it their PPR if they are working abroad and didn't rent it. They came home a few times a year and stayed in the house.
 
I imagine it has to be apportioned. It was not their main residence while they were working abroad.

[broken link removed]

Main exemption from CGT is

Gains on the disposal of property owned by you (a house, apartment, etc.) which was occupied by you or by a dependent relative as a sole or main residence.

Underlining the dependent relative bit as you said two children were in the house. Not sure if anybody over 18 can be a dependant or anyone under 26 (?) if in full time education I imagine.

On that link you can find this on page 15 of the guide:


Partial relief


(b) The exemption is also restricted where the taxpayer has not lived in the house for long periods. However, a

period of up to twelve months immediately before the end of the period of ownership is treated as a period of

occupation even though the owner may not have been actually living in it during that period. (see Example 5 in

Chapter 11).




 
Why is all this discussion regarding a relief from Gains that has to be applied for, when we are talking about a loss situation?

(If PPR isn't claimed for despite an entitlement to same, then CGT is payable - but we are talking about a loss here, not a Gain so unsure why PPR is being discussed)
 
Setanta12 said:
Why is all this discussion regarding a relief from Gains that has to be applied for, when we are talking about a loss situation?
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Because if you can prove it one way than you can prove it applies the other way. If it would be taxable as a gain, it would be allowable as a loss (no losses are generally in examples as we hadn't had the bust when revenue guides were written)
 
Setanta12 said:
Why is all this discussion regarding a relief from Gains that has to be applied for, when we are talking about a loss situation?

(If PPR isn't claimed for despite an entitlement to same, then CGT is payable - but we are talking about a loss here, not a Gain so unsure why PPR is being discussed)
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If a gain is not taxable then a loss in not allowable.

This query came up before on AAM and it changed my view of the relief. I always understood that it had to be a condition of employment that caused the person to move away from their PPR. If we refer to Section 604 TCA 1997:
(5) (a) In this subsection, “period of absence” means a period during which the dwelling house or part of a dwelling house was not the individual's only or main residence and throughout which he or she had no residence or main residence eligible for relief under this section.

(b) For the purposes of subsections (3) and (4)—

(i) any period of absence throughout which the individual worked in an employment or office all the duties of which were performed outside the State, and

(ii) in addition, any period of absence not exceeding 4 years (or periods of absence which together did not exceed 4 years) throughout which the individual was prevented from residing in the dwelling house or the part of a dwelling house in consequence of the situation of the individual's place of work or in consequence of any condition imposed by the individual's employer requiring the individual to reside elsewhere, being a condition reasonably imposed to secure the effective performance by the employee of the employee's duties,

So it appears as long as the individual worked in an employment or office outside the state and did not own another PPR then the gain on the Irish House would be exempt as a PPR and therefore any loss arising would not be allowable.
 
According to

https://www.paylesstax.ie/disposal-of-your-principal-private-residence-2/

2.1 What happens if I sell my residence at a Loss
Unfortunately if your house is sold at a loss you cannot use the loss for offsetting against other taxable gains.

If the house was let out for a number of years during your period of ownership then a proportion of the loss on its sale could be used for offsetting against other gains.

so that seems to back up what Joe_90 is saying in this case
 
Joe_90 said:
If a gain is not taxable then a loss in not allowable.

This query came up before on AAM and it changed my view of the relief. I always understood that it had to be a condition of employment that caused the person to move away from their PPR. If we refer to Section 604 TCA 1997:
(5) (a) In this subsection, “period of absence” means a period during which the dwelling house or part of a dwelling house was not the individual's only or main residence and throughout which he or she had no residence or main residence eligible for relief under this section.

(b) For the purposes of subsections (3) and (4)—

(i) any period of absence throughout which the individual worked in an employment or office all the duties of which were performed outside the State, and

(ii) in addition, any period of absence not exceeding 4 years (or periods of absence which together did not exceed 4 years) throughout which the individual was prevented from residing in the dwelling house or the part of a dwelling house in consequence of the situation of the individual's place of work or in consequence of any condition imposed by the individual's employer requiring the individual to reside elsewhere, being a condition reasonably imposed to secure the effective performance by the employee of the employee's duties,

So it appears as long as the individual worked in an employment or office outside the state and did not own another PPR then the gain on the Irish House would be exempt as a PPR and therefore any loss arising would not be allowable.
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Can I ask you this Joe, we have a house in Ireland and are gone many moons, it was our PPR, we moved because my OH got a job transfer abroad, he is now basically retired, if we hadn't bought a house abroad are you saying we'd have to pay zero CGT on that Irish house?

Does the fact one of us got a job transfer make any difference.

Surely leaving the country for a long time, maybe a lifetime doesn't allow you to keep the CGT relief on PPR.
 
"If a gain is not taxable then a loss in not allowable." Not always the case, and gives rise to a lot of planning.

I stand corrected re my earlier comment, been sometime since I was in this area - but the RELIEF in PPR is in fact an EXEMPTION! As a general rule - how I hate general rules in taxation, there are always exceptions - you need claim reliefs not exemptions !
 
Bronte said:
Can I ask you this Joe, we have a house in Ireland and are gone many moons, it was our PPR, we moved because my OH got a job transfer abroad, he is now basically retired, if we hadn't bought a house abroad are you saying we'd have to pay zero CGT on that Irish house?

Does the fact one of us got a job transfer make any difference.

Surely leaving the country for a long time, maybe a lifetime doesn't allow you to keep the CGT relief on PPR.
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The absence periods mentioned in previous posts count as periods of occupancy only if the owners subsequently re-occupied the property as their PPR - TCA 1997 s 604 (5) (b) (ii).
 
Sophrosyne said:
The absence periods mentioned in previous posts count as periods of occupancy only if the owners subsequently re-occupied the property as their PPR - TCA 1997 s 604 (5) (b) (ii).
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Top of the Class!!!

shall be treated as if in that period of absence the dwelling house or the part of a dwelling house was occupied by the individual as his or her only or main residence if both before and after the period the dwelling house (or the part in question) was occupied by the individual as his or her only or main residence.
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If we give away all the secrets there will be no way to get clients in to charge a fee!!!!!!!
 
Bronte said:
Can I ask you this Joe, we have a house in Ireland and are gone many moons, it was our PPR, we moved because my OH got a job transfer abroad, he is now basically retired, if we hadn't bought a house abroad are you saying we'd have to pay zero CGT on that Irish house?

Does the fact one of us got a job transfer make any difference.

Surely leaving the country for a long time, maybe a lifetime doesn't allow you to keep the CGT relief on PPR.
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Subject to Sophrosyne's point of having to occupy the house before and after the period of absence. I also have some doubts where the property was rented out and also if the person was self employed whether it would it apply. BUT there appears to be an opportunity where someone leaves Ireland for employment and does not purchase another PPR for PPR relief to apply. I'd imagine rare enough but who knows.
 
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