Capital gains question

[reb30]

I bought an apartment in 2002, lived in it for nearly 2 years, in 2004 bought another house, kept it and rented it out from 2004 to 2007 (dec) sold it in jan 08. Question is what is liability for CGT? I assumed it was purchase price to selling price, but spoke to someone that said If i took valuation at 2004 to what I sold at is the way to do it? It would be big difference in what I have to pay. profit was 80k if I take the original price to selling price but only about 40-50 if I take valuation price for 2004. anyone help me? thanks

 

[ClubMan]

I bought an apartment in 2002, lived in it for nearly 2 years, in 2004 bought another house, kept it and rented it out from 2004 to 2007 (dec) sold it in jan 08.

Kept and rented which? First or second property?

Question is what is liability for CGT? I assumed it was purchase price to selling price, but spoke to someone that said If i took valuation at 2004 to what I sold at is the way to do it?

Definitely not the latter. It's some portion of the total capital gain over the full period of ownership. If you mean the first property which was your PPR for 2 years and then rented for 4 (?) then approximately (4-1)/(2+4) = 3/6 = 50% of the total gain would be assessable for CGT.

Since you rented the property out within 5 years of ownership you would also seem to be liable for a clawback of stamp duty under the old 5 year rule. Did you pay this already or is it outstanding?

 

[reb30]

Rented the first property, the apartment. I have already paid the stamp duty clawback in Jan 08 when I sold it, 7k roughly. When sending off form 11 do I just submit my own calculations? Should I get accountant to do this for me? So if it was 50% it would be 50% of the total profit, so if I made 80 I would be calculating CGT on 40k at 20%?

 

[ClubMan]

Were you charged any interest and penalties for payment of the SD clawback in 2008 when it should have been paid in 2004?

Since you are not sure how to do the calculations you should get professional assistance. If the portion of the total gain assessable for CGT is 50% (it may not be exactly that depending on the precise timeline) then there is still the matter of offsetting allowable costs etc. to reduce the CGT bill further. As a very, very rough guideline you seem to be looking at approximately €80K x 50% x 20% ignoring allowable expenses etc.

 

[reb30]

I am not too up on the rules etc so when I sold in jan I just assumed I paid the stamp duty then, my solictor send off letter on my behalf explaining that I wasn't aware that I had to pay in 2004, I got letter back within 3/4 weeks acknowledging payment, no penalties! I was delighted obviously. RAther than paying CGT bill at the time I set aside 15K put into a term deposit account and now as its getting closer I am now trying to get my stuff together. I think I will need help with it, but its fantastic news that I don't have to pay on the 80 profit, can afford to get professional help now!! thanks a million