Key Post CGT on a home which is rented out for a period

[Brendan Burgess]

This has come up a few times and I was asked a question about it today, so I have extracted the relevant sections of the Revenue Guide CGT 1 and attached them to this post.

Here is a simple example using the figures for 2014

House bought 1 January 2005 for €100,000 including stamp duty and other costs.
Occupied as Principal Private Residence until 31 December 2012
Sold for €155,000 on 31 December 2014
Costs of sale: €5,000

Period of ownership |10 years
Period of occupation as PPR (including last 12 months)|9 years

Calculation

Net sale price after cost of sales|€150,000
Purchase price|€100,000
Capital Gain|€50,000
PPR Relief €50,000 x 9/10|€45,000
Capital Gain after PPR Relief|€5,000
Less personal exemption|€1,270
Chargeable Gain|€3,730
Tax due @33%|€1,230

Payment dates
For sales made between 1 January and 30 November, the tax must be paid by 15 December of that year
For sales made between 1 December and 31 December, the tax must be paid by 31 January of the following year

Return
The CGT return should be made with your income tax return by 31 October the following year.

 

[Brendan Burgess]

Frequently Asked Questions

Check out the Revenue's Guide to CGT for a full explanation and the more technical Revenue Guidance Notes


How are the dates of disposal and acquisition for CGT purposes determined?
The main rules for determining the time of disposal and acquisition for CGT purposes are as follows:

For disposals under an unconditional contract the time of disposal and acquisition is the date the contract is made, not the completion date.
Do I get any allowance for inflation?

If you bought the house before 31 December 2002, you will be allowed to adjust the purchase price for inflation between the date of purchase and 31 December 2002. Inflation after that date is ignored.

Do I pay CGT if I give someone a gift of the house?
Yes. You must use the market value of the house for the CGT calculations.

I have to pay off a mortgage of €200,000
The mortgage is not relevant.

I rented out the house while I worked abroad for 5 years.
Not sure

 

[Brendan Burgess]

I don't understand the conditions for working abroad

In addition to the above the following periods of absence from the house are also regarded as periods of occupation:
(a)
(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.
providing that, both before and after those periods, the house was the owner’s only or main residence and throughout those periods he/she had no other house eligible for exemption.

If I go off to Australia for two years , those two years count as periods of occupation.

If my employer requires me to reside in London, presumably (i) covers it.

But if my employer requires me to move to Cork, but my house is in Dublin, then it's covered by (ii) but not by (i)?

If I move to Cork and find a job there, is that covered?

 

[Brendan Burgess]

Tax tips

If you have a CGT liability, make sure that your returns and payments for any Local Property Tax ( Yes - Local Property Tax) are up to date, or you will pay a surcharge of 10%. 10% surcharge on CGT bill due to LPT not being paid on time!
If it's close to the year-end try to defer the sale to the new year, so you will have more time to pay the bill.

If you come back from abroad, move back into your home before you sell it, so that the period abroad will be considered a period of occupation for CGT purposes. If you sell the house without living in it, that period will not be exempt.

If you have unrealised losses on other assets e.g. investments in shares, make sure to sell these shares so that you can set the losses against any capital gains on your home.

If you have big gains on your home and you move abroad, you probably should rent while you are abroad rather than buy. (Is this correct?)

 

[Brendan Burgess]

Tax tips

If it's close to the year-end try to defer the date contracts are signed to the new year, so you will have more time to pay the bill.

If you come back from abroad, move back into your home before you sell it, so that the period abroad will be considered a period of occupation for CGT purposes. If you sell the house without living in it, that period will not be exempt.

If you have unrealised losses on other assets e.g. investments in shares, make sure to sell these shares so that you can set the losses against any capital gains on your home.

 

[Eithneangela]

Another important consideration is that the date of sale is actually the date of signing contracts, as far as Revenue is concerned.

We sold this month but because contracts were signed in November, we had to pay CGT by today (15th December). This is extremely important especially if the funds for the purchase have not been cleared in your bank account. It means that you might have to fund the CGT until the purchase funds are cleared in your account.

 

[Brendan Burgess]

Hi Eithne

Thanks. I would have assumed that it was the date of completion. I have updated the FAQ accordingly.