CGT liability

U

Usurper

Registered User
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Hi,
I am selling my house, which I have owned for 5 years, and lived in it all that time. It looks like it will sell for 100k over what I bought it for, that's what last bid is at. There has been about 15k of renovation done in that time. The valuations we got for it equal what the current bid is. It has a side garden, suitable for development. Everything I have read so far points to me being CGT excempt, but would like others opinions.
 
As this appears to have been your Principle private residence since you purchased it and the site is less than one acre you are Capital Gains Exempt
 
The most likely position is that Principal Private Residence Relief applies, and that, as a result, no CGT is payable.

However, the OP’s comment about the development potential of the side garden does add a potential wrinkle; if that development potential is reflected in the price, Revenue could come looking for some CGT...
 
john luc said:
So how would you word a sale agreement to not trigger CGT.
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The wording of a contract has nothing to do with it; either the price reflects development value or it doesn’t i.e. the price is greater than it would be if there was no development potential and there was only amenity value for the grounds.

On the face of it, unless the price the OP paid included development value, then an increase of 100k over several years, including whatever value the 15k off enhancement has added, wouldn’t suggest any material development value in the current selling price.

Development value would normally be fairly obvious insofar as a property or piece of land will be valued far in excess of its amenity / current use value, by reference to other similar property.

A valuation report, which explicitly values the property on the basis of its current use would probably lend some assistance.
 
So to take an example of a house sold for 600,000 and the last house sold in that estate was 500,000. Would the seller have to make a declaration to the revenue or would it be up to revenue to query it.
 
john luc said:
So to take an example of a house sold for 600,000 and the last house sold in that estate was 500,000. Would the seller have to make a declaration to the revenue or would it be up to revenue to query it.
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I’m not sure you’re getting the gist here - this is about a question of fact - either the price the property fetched reflects development value or it doesn’t. The vendor will know, normally, whether it does or not, because they’ll have been advised that it does andthey’ll look for, and be offered, more money for that reason.

There could be any number of reasons why a particular house might sell for 20% more than the previous house in that estate. It would be unusual enough for a house in a modern estate to have development value though, as the sites are so small and presumably PP for any material development in the middle of a housing estate would be problematic.

Development value would normally be fairly clear where it arises, like granny and grandaD’s (may they RIP) old semi-dilapidated house on a big site near the edge of a town, with housing estates all around, suitable for razing the preexisting house and firing in a small residential development. That house and site would go for a multiple of what anyone, wanting to do up and live in the house, would pay. (Oh, and it’d be bought by a developer / builder!)

Likewise, agricultural land generally has a clearly identifiable value to within a close range. But when lands get rezoned, or there’s otherwise a potential for development (eg it’s been set out as a site and/or sale is subject to PP) then the value will be a multiple of the current use value.
 
Well I know of one example were a housing estate in Dublin had many houses that had large gardens and some of them had developed new property's on these. The house in question sold for a larger price as there was such potential. It was at the time of the boom so rising prices were the norm. No additional tax applied.
 
john luc said:
Well I know of one example were a housing estate in Dublin had many houses that had large gardens and some of them had developed new property's on these. The house in question sold for a larger price as there was such potential. It was at the time of the boom so rising prices were the norm. No additional tax applied.
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What do you mean “No additional tax applied”? Are you au fait with the tax affairs of all those people? Do you think that in a self assessment system, the fact that somebody might (deliberately or inadvertently) fail to declare and pay the correct tax, means no additional tax was due...?
 
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