Capital gains tax calculations

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Thanos0

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i have a question. Does capital gains tax happen regardless or does it only happen say if a property raises in value.

Example:

Suppose a property was bought in 2004 for €312000.

The property is rented.

Today the property is worth €260000.

Mortgage is €160000.

Therefore equity is €100000.

However the property is rented.

Does CGT apply given the property is rented but below the purchase price.

If CGT did apply - then it's 33% and after solicitors fees I'd say €40000 is lost.

Or if CGT didn't apply then it's say nearly €90000 after sale
 
You only pay CGT on a gain in value (mortgage amount is irrelevant). There would be no liability in your example above.

You would record the capital loss, and have it available to offset against gains in the future (if you're lucky to have them).
 
Are you sure? I was sure CGT had to be paid on the sale of rental properties regardless.
 
Thanos0 said:
Are you sure? I was sure CGT had to be paid on the sale of rental properties regardless.
Click to expand...

Are you suggesting that there could be 33% CGT on the value less the outstanding mortgage? 260k - 160k x 33% = 33k in tax? Where there was a loss of €42k.
 
Ok suppose the rental property is sold. There is a capital gains loss of 42k.

Then suppose a new property is bought. Do you have to pay tax (stamp duty) or can the loss offset against stamp duty etc?
 
Mortgage is not relevant.

The clue is in the name.

You pay CGT if you make a gain on disposal of an asset.

Any loss can be carried forward against future capital gains.

No, the capital loss can not be offset against SD on a new property.
 
Note that when calculating capital gains/losses, other expenses can be included, e.g. SD paid on the original purchase.
 
Ok can the original stamp duty paid be offset against a new purchase and how much does an estate agent charge for both sale and new purchase.
 
I am assuming you are talking about 2 different properties here - it's different if one party is buying our a 2nd party in a joint ownership.

No there is no offset allowed on stamp duty.

The estate agent only charges for the sale (vendor pays).

You will have legal fees on both.
 
How much are legal fees for sales and purchasing property. Is it a set price or percentage?

The same for the estate agent?

Rough guesstimates I'm looking for.
 
Estate agent is percentage. Will depend on area / value, but average about 1.5% of sales price, plus VAT.

Legal fees are fixed, but outlays on purchase depend on how property is registered, whether it's a house or apartment.

on sale, c. 1500 plus VAT

Purchase, slightly higher outlays (land registry costs). Budget around 2k.

You might get cheaper on this - particularly if you use same solicitor for purchase & sale.

Stamp duty is payable on the purchase at 1%
 
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