Capital Gains Loss Calculation

I had a house for four years and sold it at a significant loss due to separation. Of this four years the house was rented for the last 18months, so it wasnt my principal residence during that time or at the time of the sale. I rang revenue to see if I could offset the full loss I made against any potential gain against another property I will sell next year. After a number of calls the response I got was that I could offset the full loss.

But my accountant tells me now that I can only offset a portion of the loss, as I will need to deduct the time I was there. But more bizzare was his comment that I will also have to deduct the last 12 months because apparently when a gain is being calculated revenue considers the last 12 months to be treated as the principal private residence, so this would also apply in my case. Does this make any sense to anyone???? Because the house was not my residence, it was actually rented for the last 12 months so why on earth would this rule apply in this case!!! I'm completely confused.

Thank you anyone who can shed light on this

Consider someone selling their principal private residence at a profit.

In some cases, they move into another house before they sell their old house. If they sell the house within 12 months, the Revenue disregard the period for which it was rented and treat it as their Principal Private Residence, and so it is not subject to any CGT. This obviously benefits the taxpayer.

My understanding of the law was that if you live in a house for 8 years and rent it out for two years, and then sell it at a profit, only 20% of the gain will be subject to CGT. However, I may be wrong and it seems from reading the Revenue Guide to CGT that the last 12 months is disregarded, so the person would only be assessed for CGT on 1/10th of the profit.

In your case, you owed a house for 48 months. It was an "investment" for 18 months, so I would have expected that you would be able to claim 18/48ths of the loss. However, it may be that you will only qualify for 6/48ths of the loss.


This is what the Revenue says:

5. Private Residence
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.

Click to expand...

Thanks very much for this Brendan. I cant understand where the revenue are coming from on this, maybe in the good times it was there to reduce the tax burden!

But surely this makes no sense now. In my current situation I just cant see the logic of the revenue guidance it just doesnt make sense, as I wasnt living in the house for the last 12 months and I certainly havent profited from this guidance note in the past! I can't understand the logic for applying it in this case....or does logic come into it at all!!!

I see the sense in it.

This is regarded as your principal private residence. it was not really an investment. Homes are treated differently from investment properties.

You don't get taxed on the increase in value of your home. So you can't claim tax relief on the loss in value of your home.