CGT for primary residence

[yygaurav]

Hi

I bought my first house in Feb 2005 in Dublin and now I am selling (moving abroad for 1 year). I would be buying a house when I come back (that’s the plan for now).

My question is

• Do I have to pay Capital Gain tax on the profit I make when I sell my primary residence
• Do I have to pay back TRS (Tax refund a source) ?

Thanks

 

[Satanta]

No.
and
No.

If it was your PPR the entire time (and you never rented the house [except under the Rent a Room Scheme]) your free of the CGT and SD liabilities.
Your TRS is not an issue as it was your PPR when you were recieving the TRS so no clawback there.

 

[DrMoriarty]

However, if you buy another house on your return, you won't have FTB status — this will affect your TRS eligibility (not a major consideration), and you'll pay stamp duty on the new purchase.

If you're reasonably sure you'll be back in a year, would you not consider holding on to the house and renting it? I realise you may have other reasons for selling and buying again — perhaps in a different location, for example — but you'll incur transaction costs...

 

[ubiquitous]

If you rent the house now you will probably be hit with a stamp dury clawback.

2 other options
- move abroad & leave house vacant, thus avoiding clawback
- explore possibility of maintaining your house as your ppr & availing of Rent a Room exemption. This may mean adapting your plans to suit the definition of PPR. Get expert professional tax advice in advance if this is a possibility.

 

[ClubMan]

However, if you buy another house on your return, you won't have FTB status — this will affect your TRS eligibility (not a major consideration)

Not necessarily - recent threads on this topic and details from Revenue indicate that even if a person buys another property later on their 7 year FTB TRS clock starts ticking again at whatever point was left off previously. This means that, for example, yygaurav has used up c. 1.5 years of his/her 7 year FTB TRS status so the clock will start ticking at 1.5 years if/when s/he returns and buys another property. I was very surprised at this but it seems to be the case. Search for recent threads on the issue for more on this.

I agree that TRS is somewhat marginal in the greater scheme of things.

 

[Satanta]

...and you'll pay stamp duty on the new purchase.

Just to clarify, you can still avoid the SD buying a new build under 125sqm (with floor area cert) and keeping as your PPR for > 5 years (just no more < €317'500 FTB exemption).

 

[DrMoriarty]

Sorry, thanks for the clarifications/corrections...

ubiquitous' final point is very valid, too, considering the stakes involved.

 

[yygaurav]

Thanks a million lads for your replies.

I am also thinking the same to keep the house. But when I come back our new office would open in Galway and I would be moving there so I am not sure if I keep this house now.

I can rent one room but then I would have to pay rest of mortgage myself (900 pm which is ok aswell). So only reason for not selling now would be to wait for "house Appricatation"

I need full wekend thinking.

 

[bacchus]

Just to clarify, you can still avoid the SD buying a new build under 125sqm (with floor area cert) and keeping as your PPR for > 5 years

As far I know, you do not need to keep it for >5years before selling.... The clawback applies if you rent within 5 years of purchase.

 

[Satanta]

As far I know, you do not need to keep it for >5years before selling.... The clawback applies if you rent within 5 years of purchase.

100% correct, the SD clawback is only in relation to the renting of the property (and even then the Rent a Room Scheme can be used to rent part of the property [to a given threshold] without implications on SD).

The "keeping as your PPR" was in relation to not switching it to an investment property/renting it out, not that you can't sell the property.
Thanks for the clarification Bacchus.

 

[Afuera]

Thanks a million lads for your replies.

I am also thinking the same to keep the house. But when I come back our new office would open in Galway and I would be moving there so I am not sure if I keep this house now.

I can rent one room but then I would have to pay rest of mortgage myself (900 pm which is ok aswell). So only reason for not selling now would be to wait for "house Appricatation"

I need full wekend thinking.

You don't say if you're going abroad for work purposes or is it just to travel. I think if you go abroad for work purposes (i.e. moved to a different office abroad) you are able to rent the house out without any problems. Sorry that I don't have a link to this and I'm not 100% sure on that but if you fall into that category it's worth investigating.

As regards holding on for capital aprectiation... well this is a risky strategy. It's you're decision but personally I don't think I'd take a bet that houses will be more expensive this time next year.

 

[Satanta]

I think if you go abroad for work purposes (i.e. moved to a different office abroad) you are able to rent the house out without any problems. Sorry that I don't have a link to this and I'm not 100% sure on that but if you fall into that category it's worth investigating.

It was mentioned on other threads (here and here), but the details are still a little hazey.

the following periods of absence from the house are also regarded as periods of occupation provided that, both before and after those periods, the house was the owner’s only or main residence and that throughout those periods he/she had no other house eligible for exemption:-
(i) any period throughout which the individual was employed outside the State
and
(ii) a period of up to four years during which the individual was required by the conditions of his/her employment to reside elsewhere.

CGT
So, at least for CGT purposes, the house is still considered as the PPR the entire time.


The SD side of it is a little more ambiguous.

When does a clawback arise?
A clawback arises if rent is obtained from the letting of the house, other than under the rent-a-room scheme. The clawback amounts to the difference between the higher stamp duty rates and the duty paid and it becomes payable on the date that rent is first received from the property.

[broken link removed]

I can't find anywhere on the SD side of things where it allows rent be recieved other than under RaRS without forgoing the SD exemption, even given circumstances as listed on the CGT side of things.
If someone has experience on it great, but from the documents it looks very questionable.