CGT on sale of overseas EU property before becoming an Irish resident

J

jwarren

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Hi everyone.

I am an EU (but not Irish) citizen, living in my own home within Schengen on the EU mainland.
I want to sell that residential EU property and then move to Ireland.
The sale will deinitely have occurred/completed before moving to Ireland.
Once in Ireland, I would then use the proceeds of the sale to purchase a home within Ireland.

So, assuming the sale occurs whilst I am still living in the home, and that all relevant taxes are paid in the foreign country, and only after that do I move to Ireland, would there be any CGT payable in Ireland ?

It seems like an obvious 'No', but I was wondering whether the event might somehow slip into IE CGT territory if, for example, both the sale and the move to Ireland happened within the same Irish Tax year.

Thanks in advance
 
Even if the two events occur in the same tax year, the property you are selling appears to be your principal private residence, so there would be no (Irish) CGT payable in any event.

(Obviously, there might be some tax liability in the country in which you reside at the time/in which the property is located, but that's a different matter.)
 
What would happen wrt CGT if I first moved to Ireland, and then once resident, I sold the foreign property (which was my principal private residence before the move) ?
I have in mind that the right work opportunity might come my way before I have sold my home and I would prefer to not miss it let's say.

Maybe Tom's reply above addresses this, but I would like to be sure.
 
If it has been your principal private residence but you move out before you sell, you should be OK. The last 12 months of the period of owners will be treated as if it was your PPR, even if it wasn't,

You only have a problem if you move out, but don't sell until more than 12 months has passed. Even then, your CGT exposure would be modest, because the total gain would be apportioned between the period when the property was your PPR (exempt) and the (presumably relatively short) period when it wasn't (not exempt).
 
Thanks Tom. What you say makes sense. I appreciate the follow up and your clarity.

On a tanget ... if I do make the move before selling AND I also manage to BUY in Ireland (i.e without the PPR sale, but instead purchase a house in Ireland using my Savings) would that change the position you have just described ? In this case the PPR sale would then happen after I have made the house purchase in IE and have already have moved in.

Whilst I may not be able to afford the property that I might consider my 'dream home' without selling the PPR, I might, for a lower purchase price, be able to get something which is a good deal for the savings that I can manage to put together.
 
jwarren said:
I do make the move before selling AND I also manage to BUY in Ireland (i.e without the PPR sale, but instead purchase a house in Ireland using my Savings) would that change the position you have just described ? In this case the PPR sale would then happen after I have made the house purchase in IE and have already have moved in.
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You are allowed the last year preceding sale to be deemed to be a period of occupation even if you didn't occupy it. See subsection 3 at the link below which says:

"Any gain on the disposal by an individual of his/her dwelling house is exempt from capital gains tax if the property has been occupied as his/her only or main residence throughout his/her period of ownership. The last 12 months of ownership is, in any event, to be regarded as a period of occupation. This allows for the case where the owner-occupier puts his/her house for sale and moves without being able to find a buyer immediately."

No 39 of 1997, Section 604, Revenue Note for Guidance

No 39 of 1997, Section 604, Revenue Note for Guidance
www.charteredaccountants.ie
 
Seeking a clarification if possible ...

If the residence was not utilized as my PPR for 100% of the ownership period, and I make the sale within the first 12 months of living in Ireland, what is the IE CGT situation ?
 
Then the gain is apportioned into taxable and non-taxable parts.

Suppose the following sequence of events:

2016: Buy the house and start living in it. Lets's say aquisition cost including professional fees, registration costs, etc is €300,000.
2021: Move out of the house and rent it to tenants
2025: Become resident in Ireland
2026: Sell the house. Net proceeds of sale are €500,000

Because you're resident in Ireland when you sell, the gain is within the charge to CGT. The gain, obviously, is €200,000. This is apportioned as follows:

Period of ownership: 10 years.

Time during which the house was your PPR: 6 years. (That's made up of 5 years when it actually was your PPR, plus the last 12 months which, even though you didn't actually live there at the time, you are allowed to treat as though the house was your PPR.

Time during which the house was not your PPR: 4 years.

So, 4/10ths of the gain, or €80,000, will be subject to CGT.

(I've done this in round years for simplicity, but in fact the period of ownership, and the periods during which the house was your PPR, should be computed to the month or the day, if the the data is available.)
 
Thanks once again Tom. Much appreciated.

Would periods of renovation where the property was uninhabitable count as periods of residence ?
Also, the property has never been rented out, nor has any income been derived from it.
 
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jwarren said:
Would periods of renovation where the property was uninhabitable count as periods of residence ?
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No. At a time when the property is uninhabitable, by definition it can't be anybody's residence.

If you move out of the property temporarily while work is being done to renovate, repair or upgrade it, a reasonable period of absence while this work is being done can be counted as part of your period of residence, but you would have to actually live in the house both immediately before and immediately after the time when the work was being done. Plus, you can't treat the property in which you actually live during this period as your PPR as well; you can only have one principal private residence at any time.
jwarren said:
Also, the property has never been rented out, nor has any income been derived from it.
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Doesn't matter. You're either occupying the house as your sole or main residence or you're not. Renting it out to someone else means you definitely aren't, but the converse isn't true; not renting out the property doesn't necessarily mean that you are living in it.
 
My circumstances have changed and I would appreciate clarifications from those that can help.

I will now move to Ireland before selling my property (where said property cannot be claimed as a prior residence).
I expect to start work in Ireland on September 1st and will move let's say a month beforehand, so arrive August 1st, 2026.

Per https://www.revenue.ie/en/property/foreign-property/cgt-disposing-foreign-property.aspx for disposing of foreign property, and
per https://www.revenue.ie/en/jobs-and-pensions/tax-residence/resident-for-tax-purposes.aspx for residence rules,

I am trying to work out what would be the latest date upon which I could sell the EU property and still remit the proceeds to Ireland without having to pay Irish CGT.

As I read it, I will not be resident for tax purposes for the 2026 year since I will have spent just 153 days (Aug -> Dec inclusive) in the country during that year. Is that correct ?
If so, then will I qualify as tax resident only after 280 days have passed - which would mean 280-153 = 127 days into 2027 (that would be ~ May 7th 2027) ?

And, most importantly, what would be the latest I could execute the sale and still remit (all or part of) the proceeds to Ireland and not pay Irish CGT ?

Many thanks in advance once again.
 
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