CGT - Principal residence rented for last 5 months during sale

Hello all.

My partner and I sold our house last year. It went on sale april 2007 and sold april 2008. It was our main residence from when we bought it in 2003 to late may 2007. It was empty from may to november 07 while we lived somewhere else in ireland. From Nov 07 to March 08 it was rented out.

Please can anyone clarify if we are liable for CGT on the sale of the house? I had thought that we had a year's grace period to sell it where we wouldnt be liable to pay CGT as it was still classed as our main residence but now I am concerned that as we had to rent it out for 5 months to pay the mortgage are we liable for CGT?

I am self employed and my partner is employed.

Many thanks for any advice.

Re: CGT - Principle residence rented for last 5 months during sale

There will be no CGT on the basis that you lived in the house for the full period of ownership with the exception of the final 11 months of ownership. The final 12 months of ownership is treated as a period of occupation when calculating the exempt portion of the gain irrespective of whether the property was lived in/rented out etc

Re: CGT - Principle residence rented for last 5 months during sale

Hi Breninio

As you can imagine I sighed a huge sigh of relief when I read your reply. Thank you.

I would be grateful if you or anyone else reading this could shed some light on completing my self employed tax return for 2008 regarding CGT and rental income? Do I simply not fill in CGT area or make any reference to the face we sold our house? What about the rental income? We made zero profit out of the rental income for the 5 months the house was rented by the time mortgage, mortgage protection, house insurance etc were taken out.

For my partner who is employed what should he do regarding his part of the rental income? What tax form should he return? We rented out the property in both of our names.

Im wondering if we should employ an accountant this year to do my return and his if we both have to submit returns.

Many thanks again.

Hi Amberley,

Yes details of the disposal need to be included on your tax return for the year. Details are included in Section L of the Form 11.

Are you and your partner married? If so a joint tax return will be filed including details for both of you (assuming no election has been made to be treated separately for tax purposes). If not your partner will need to file his own tax return (probably a form 12 for a PAYE taxpayer).

You state in your e-mail that the property was first rented out in November 2007. If this is the case, details of rental income for November and December 2007 should have been included on 2007 tax returns. Was this done?

Just to note, when caclulating the net rental income on the property you should only take a deduction for the mortgage interest i.e. no deduction should be taken for the capital element of the loan repayments. This deduction for mortgage interest is only available if the tenency has been registered with the Private Residential Tenancy Board. Has this been done?

If the property was let funrnished you should also be able to claim a wear and tear allowance when calculating the net rental income.

There is a lot of information on the tax treatment of rental income on the Revenue website so maybe have a look there first before deciding whether you need an accountant/tax consultant to assist you with the tax return.

I know this wasn't the original query but also beware of stamp duty clawback (if you availed of owner occupier rates of stamp duty when you purchased). You didn't own the house for 5 years prior to renting it out before Dec 5th, 2007. Revenue information here.