CGT Question

B

Bobby

Registered User
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I have an investment property that I have been renting out over the past few years. I plan to sell it in order to extend my own private dwelling. Is there any way I can reduce my CGT bill based on the fact that I am extending my own primary residence? The argument comes from the fact that if you sell a primary residence to trade up - you are exempt from CGT. If my home improvements exceed that of the CGT bill then am I not really doing the same thing? Sounds hopeful, I know!
 
You can offset stamp duty, costs incurred prior to letting out the property, tiling, decorating etc (these should not be claimed each year prior to calculating your tax bill), legal expenses (buying & selling), auctioneers fees, multiplier effect if purchased prior to 2003, and the annual allowance of 1,270 if not used elsewhere i.e. selling shares etc.

Is there any way I can reduce my CGT bill based on the fact that I am extending my own primary residence?
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As for your actual query - Not that i'm aware of
 
Bobby said:
The argument comes from the fact that if you sell a primary residence to trade up - you are exempt from CGT.
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This isn't exactly correct. If you sell a primary residence, you are exempt from CGT, subject to some conditions, but regardless of what you do with the money.

Bobby said:
If my home improvements exceed that of the CGT bill then am I not really doing the same thing?
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No. What made you think otherwise?
 
A guy in the pub!

he said that he sold a house for €220,000 and bought another unfinished house for €150,000 leaving €70,000 subject to CGT(ignoring any expenses). Because his new primary residence needed a lot more money to finish he didn't pay CGT - so he says.
 

This does not make any sense
This is my understanding of how CGT is calculated
Sold house for 220K
Bought house originally for say 100 indexed 120
Subject to CGT 100K at 20%
Bought new house for 150K
There used to be something called rollover relief (no longer available) where you could sell a property and buy another and offset the new property against the old prior to applying CGT.

Because his new primary residence needed a lot more money to finish he didn't pay CGT
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I think he explained it to you wrong. The above would be an example of how CGT is calculated. In the above example no CGT is payable if you include the rollover relief part.
The profit element was used to update his PPR
 
Sorry, you are right. He would have to pay CGT on €100k. But the main point is that without this rollover relief there is no other mechanism that he could have avoided paying any CGT - correct? If so, then he's not out of the woods yet!
 
asdfg said:
There used to be something called roll over relief (no longer available) where you could sell a property and buy another and offset the new property against the old prior to applying CGT.
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Sorry if I'm coming across as some sort of CGT pendant, but just for the sake of clarity, rollover relief never applied to property per se except in a limited way for business assets (farmland, a shop etc) or what are termed "pre-63 multiple-unit" apartments.
 
rollover relief never applied to property per se except in a limited way for business assets (farmland, a shop etc) or what are termed "pre-63 multiple-unit" apartments.
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Did not know about that. Sorry about that Bobby if I misled you.
If it was a pre 63 multiple-unit" apartments prev post should stand

If not, it looks like your friend owes CGT calculated in the normal manner
 
Sorry ubiquitous and for clarity for others I did make this comment but withdrew it as soon as I saw your prev post (post appear to be crossing here as well)
 
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