CGT question when owning 2 properties

[Blarney]

Hi all,
I own 2 properties at present. One was built by myself and my ex Husband in 2006 and we divorced in 2017 and the house was signed over to me. We lived in it the whole time. I continued to live in it but in 2019 I purchased another property which needed renovations. I still kept this as my main property but now I am considering selling both and just moving to another house altogether.

I presume both can't be my PPR so if I look at my original home as my PPR then presumably if I sell both around the same time the second home would be considered liable to CGT? I have spent time recently living in my second home while I do some work in my PPR getting ready for it to be sold.

Another option I'm considering is renting my original home for a few years or so and if I do it presumable would become liable to CGT due to being a rented property.
If I do what would be the CGT calculation - Disposal proceeds less value at point of divorce OR cost when built?

Thanks
Catherine

 

[Blarney]

Can anyone give me an idea on above please?

 

[cremeegg]

You own house 1 for 17 years. You lived in it as your PPR for 15 of those years. When you sell you can count it as your PPR for 16 years, the 15 you lived in it plus 1 extra year allowed. So you pay CGT on 1/17th of the profit.

If you live in house 2, that is your PPR now. If you owned it for 4 years and lived in it for 1. You will pay CGT on 1/2 the gain. That is years lived in 1 plus 1 allowed is two years.

 

[T McGibney]

You own house 1 for 17 years. You lived in it as your PPR for 15 of those years. When you sell you can count it as your PPR for 16 years, the 15 you lived in it plus 1 extra year allowed. So you pay CGT on 1/17th of the profit.

She'll have to account also for the fact that she only owned 50% of the property until (presumably) 2017 and 100% thereafter but what you're saying here is of course otherwise correct.

 

[Blarney]

Thanks cremeegg and T Mcgibney. I'm not sure I fully get it so if you can clarify please I would appreciate it.

I see where your getting the 1/17 from, but what is the "profit" calculation in this case? sale proceeds less
1. value of property at point at which I started renting or
2. a calculation based on the fact that I owned 50% of the property until 2017 and 100% until point I start renting.

If I sell property 1 as my PPR without renting it would their be CGT at all?

In the case of House 2 I though if I live in it for the next 2 years or so I wouldn't be liable to CGT at all ? Am I in a mess because I own 2 properties at the same time? I have put a good bit on money into doing up this property as it wasn't livable in when I bought it but it now is.

I just want to understand all this as I don't want to rent my first property and end up with a huge tax bill after doing so.

Thanks a million
Catherine

 

[AAAContributor]

Re House #1:

we divorced in 2017 and the house was signed over to me.

Assuming the transfer of the house was per a divorce decree by order of the Court, you as the acquiring spouse are treated as acquiring the asset on the same date and for the same amount as the disposing spouse. If the transfer was per any other arrangement (informal or otherwise), please advise.

I see where your getting the 1/17 from, but what is the "profit" calculation in this case?

Gain (or "profit") = Sales proceeds less the original build cost of the house (and any costs to buy the site on which it was built).

For the sake of example, if the costs of acquisition back in 2006 were €300,000 all-in between both you and your former spouse and the market value today is €500,000, profit = €200,000.

 

[Mrs Vimes]

If you live in house 2, that is your PPR now. If you owned it for 4 years and lived in it for 1. You will pay CGT on 1/2 the gain. That is years lived in 1 plus 1 allowed is two years.

Just on this point, it's not an extra year allowed, it is the final year of ownership. If you are living in the property for the final year of ownership you do not get to count it twice as PPR.