capital gains on property purchasesd at below market value

About 6 years ago we sold a property to our daughter for 125k which had market value of 255k. ( we paid capital gains on 255k value). The difference of 130k was a gift.
Our daughter rented out the apartment for the first 2 years and has lived there since as her principal private residence.
The question is, if she sold the apartment would she pay capital gains tax on the 2year rental period and if taxable would her cost of acquisition be deemed be 125k or 255k?
Would appreciate any advice.

Hello

The base price for your daughter would be €255k plus any associated costs of acquisition. The gift element would have been the amount to be used for capital acquisition purposes.. she may have used small exemptions, part of her class A threshold too..

For Ppr relief .. she should qualify for the remaining four years .. the first 2 years would not qualify. The gain would be calculated as normal then apportioned, 2/6 taxable ..

I had a look at that another relief .. land or property acquired between 7 December 2011 and 31 December 2014.. I thought it would have given your daughter full relief.. however there is a condition that she falls fowl off so the relief won’t apply..( property if acquired from a relative must have been acquired at not less than 75% of market value)...

€255k and if, for example, she owned it for 5 years and lived there for 3 years, 4/5 of any gain would be tax-free. You get an extra 12 months’ deemed occupation.

Gordon/Mary thank you for the very prompt and helpful replies.
An add on question if I may. My daugter took ownership in mid Dec of the year of purchase. Would Revenue look upon the couple of weeks of ownership by her as a full year of ownership in terms of calculating the time period fraction of non Principle Private Residence when calculating the Capital Gains Tax liability?

Hi .. I’m not entirely sure what Gordon says is fully correct..

The last 12 months are always deemed residence for PPR , but as your daughter let the property for the first 2 years and lived in it for the remainder of the time, I would still be of the view that 2/6 are taxable. If she let it for the last 12 months rather than one of the years at the start then only 1/6 would be taxable as the last year would be deemed residence for PPR..

Gordon Gekko said:

€255k and if, for example, she owned it for 5 years and lived there for 3 years, 4/5 of any gain would be tax-free. You get an extra 12 months’ deemed occupation.

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Not in this instance; the additional 12 months you refer to is specifically the final 12 months of ownership (section 604(4)). If you actually live in it up to date of disposal then you can't double count that period.

Hello,

In terms of the add on question.. Revenue don’t deem a year to be part of a tax year, they are just normal years..

So she owned it for say 3 weeks in 2012, that’s just 3 weeks .. revenue don’t round it to 52 weeks.. generally I just round to months when working on the faction of the gain for relief but no rule to say you can’t do it by weeks or days .. I hope I’ve explained this well?!

You are correct. One learns something new every day. I have never actually seen someone renting out a property and then moving back in; it’s always the other way round!

Hi all, thank you for responding. In case my last query was not set out clearly can I try again please and thank you for your patience. The first year of ownership by my daughter was from mid December i.e. Plus/minus 2weeks. The property was rented out during this period. Will Revenue count this two week period period as a full year in formulating the fraction to be applied for calculating the taxable gain period?

Mary, only seeing your reply now. Thank you thats great. Gordon thank you also for further responding.