Capital gains tax on sale of investment property.

[Meath Lady]

We purchased a property for thirty thousand in 1993 for investment purposes. The property has been let since then with the usual voids for decoration, change of tenants etc. We replaced the roof in 2007 for 4500 approximately and put in a new kitchen also. We are currently in the process of replacing windows and doors, rewiring, insulating and renovating fully. We are wondering if it might be wise to sell it then. What capital gains tax would we pay?. The property would probably sell for about 250000. Is there am exemption figure for each year. Any advice appreciated as this would help decide the best course of action.

 

[Gordon Gekko]

Given the facts as presented, you'd be entitled to deduct the following from the sales proceeds:

- Costs of selling (estate agent, legal, etc).
- Enhancement expenditure, which would include the roof, the kitchen, the rewiring, the insulation and the renovation.
- Costs of acquisition (legal, stamp duty) adjusted for inflation as per the capital gains tax multipliers.
- The purchase price converted to Euro and adjusted for inflation as per the capital gains tax multipliers.
- Any capital losses either of you have accrued.
- €2,540 (your personal exemptions).

 

[Meath Lady]

Given the facts as presented, you'd be entitled to deduct the following from the sales proceeds:

- Costs of selling (estate agent, legal, etc).
- Enhancement expenditure, which would include the roof, the kitchen, the rewiring, the insulation and the renovation.
- Costs of acquisition (legal, stamp duty).
- The purchase price converted to Euro and adjusted for inflation as per the capital gains tax multipliers.
- Any capital losses either of you have accrued.
- €2,540 (your personal exemptions).

Thanks for the info. The capital gains multiplier appears to stop at 2003 so do I just use that one to calculate capital gains. Do I use the figures at the time for earlier improvements or do i also use multiplier for this also. Just trying to get some rough idea of what taxes would be owing. Thanks

 

[Gordon Gekko]

Indexation stops in 2003 so you just go to the point where "expenditure incurred in 1993" and "2003 et seq" meet. Make sure you adjust the acquisition costs too (and not just the purchase price).

The tax year used to be 5 April to 4 April, so 1992/1993 includes January to March 1993 and 1993/1994 includes April to December.

You'd use the appropriate multiplier for enhancement expenditure incurred prior to 2003, but from your opening post most if not all seems to have been during 2007 and subsequent years.

 

[Meath Lady]

Indexation stops in 2003 so you just go to the point where "expenditure incurred in 1993" and "2003 et seq" meet. Make sure you adjust the acquisition costs too (and not just the purchase price).

The tax year used to be 5 April to 4 April, so 1992/1993 includes January to March 1993 and 1993/1994 includes April to December.

You'd use the appropriate multiplier for enhancement expenditure incurred prior to 2003, but from your opening post most if not all seems to have been during 2007 and subsequent years.

Thanks for your prompt reply. Will have a look at the figures and ponder.