CGT calc when property was PPR initially, then investment

[tomos]

I am considering keeping my current PPR of 10 years as an investment property when I move on. However, I am concerned about how the CGT will be calculated when I eventually do sell the property.

In this key post
it is said the CGT is calculated pro-rata i.e. if the property is rented out for another 10 years (50% of total time owned), the tax is calculated on 50% of the total gain made in the 20 years. As that post points out, if the property gains little in the latter 10 years I could be at a significant loss versus selling now and investing elsewhere.

My question is: Given that I have a firm offer on the property now, and will also need to get a valuation for mortgage purposes, will revenue not accept this as proof of the value at this time, and calculate the tax on the gain from now onwards?

Any thoughts?

Thanks,
T.

 

[rainyday]

Re: CGT calc when property was PPR initially, then investmen

will revenue not accept this as proof of the value at this time, and calculate the tax on the gain from now onwards?

It's not a question of whether you have proof or not. The regulations calculate the gain from the time you purchased the property - full stop.

 

[tomos]

thanks

Thanks Rainyday, if them's the rules, them's the rules I guess. Just seems contrary to the spirit of the law. If there's less gain in the second 10 years, I will in fact be taxed on the some of the gain while it was my PPR.
T.

 

[rainyday]

Re: thanks

If there's less gain in the second 10 years, I will in fact be taxed on the some of the gain while it was my PPR.

Correct - That's one of the reasons why Brendan frequently advises those considering holding onto their current property for rental when moving to a new house to sell their property instead.