Capital Gains Tax- Converting Principal residence to investment property.

Hi

My future wife bought a house in her own name for the equivalent of €100K euro in 1998, the house was her principal private residence.

In 2008 we got married and we remortgaged the house for €250K (the house was valued at €290k ), converted it to an investment property and used the released equity to buy a new family home.
As part of the remortgage process, my name was added to the new mortgage and the property folio.

Should we sell the house tomorrow for €200K
Q1 – Is it correct to assume that capital gains applies on €100k i.e. difference between purchase and sales price (I'm aware that there are exemptions for the years it was my wife's main residence)?

Q2 – Does the fact I came on board in 2008 make any difference?

Thanks,
Brian

You are deemed to have acquired at the same base cost and having the same period of ownership and occupation as your spouse ( s604(9)(b) TCA). You can index the 100k, depending on whether it is 97/98 or 98/99 acquisition, take into account costs of acquisition and disposal, any enhancement expenditure, reduce for periods of occupation and for small gains exemption.

At least you get the two Small gains exemptions.

Hi Vanilla,

Not the answer i was hoping for but thanks for your response!

I know, right? It would be nice if you were deemed to have acquired your half at the time of transfer and at that value, but Revenue won't allow that, they are far too clever!

As you've said yourself, Principal Private Residence Relief will apply to some of the gain. That's gonna have a material effect on things. Add in stamp duty (if it applied), legals, selling costs, indexation until 2003 and any enhancement that was made to the property (subject to looking at the PPR/investment periods) and that €100k should be beaten down significantly.

How did you figure out the mortgage interest relief applicable to the rent?