is this tax calcuation correct ?

C

chanceanarm

Registered User
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14
Hi all,
just a quick query regarding my understanding of capital gains tax to be paid on a house if i sell.
I bought it 5 years ago for 50,000 pounds and no stamp duty as first time buyer. Solictor fees of 1,000 pounds

If i round the buying costs up to around 70,000 euro. ( 50,000 and 1,000 )

Then if i sell for 270,000 euro , I take the 70,000 from this sum to arrive at 200,000

I owe the taxman 20 percent of this ? i.e 40,000 euro.

These are ball park figures but have i missed out on anything simple. This was never my PPR, I always had this rented.

thanks for any replies.
D
 
you've not indexed your cost. ahouse bought in 99/00 would have an indexed purchase cost of €70,000 x 1.193 = 83510

so:

Proceeds: 270,000
Legal Costs 2,700 (approx 1%)

Net Proceeds 267,300

Less Indexed Cost 83,510

Chargeable Gain 183,790

Personal Exemption 1,270

Chargeable 182,520

CGT @20% 36,504


if you sold it between January last and September that figure is due by 31 October 2005.
 
You are rounding up a bit too much, I think! I make 51000 punt about €65000. Also you are entitled to take into account any enhancement expenditure on the house, a small gains exemption of €1270 for each owner - so if it is in joint names its €1270 each and the costs of selling- i.e. auctioneers and solicitors fees on the sale.
 
Thanks for the quick replies !

I had never heard of the indexing before. Where do you find out the index number from ?

If i spend 10,000 euro on refurbishing the propery before i sell, would i be allowed to take this off the 270,000 ? And again reduce the amount on which to pay tax ?

Finally, If i did sell, would this really need an accountant to sort this out for me ?

thanks again,
D
 
Does anyone know where to find the indexation multiplier in order to calculate CAT on a property inherited approx 20 years ago (not mine). Gongey's post mentioned that multiplier today. Couldn't find it on Oasis so any advice would be appreciated.
 
sherib said:
Does anyone know where to find the indexation multiplier in order to calculate CAT on a property inherited approx 20 years ago (not mine). Gongey's post mentioned that multiplier today. Couldn't find it on Oasis so any advice would be appreciated.
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Do you mean CAT (Capital Acquisitions Tax) or CGT (Capital Gains Tax).

The indexation multiplier applies to Capital Gains Tax, if this is what your friend wants (ie is now selling and wants to know how much to index the value 20 years ago by) it can be found here
[broken link removed]

If the house was inherited 20 years ago and no CAT was paid at the time and in fact it should have been and the person is wishing to 'fess up now the rate in effect 20 years ago plus interest and penalties would apply.
 
"If i spend 10,000 euro on refurbishing the propery before i sell, would i be allowed to take this off the 270,000 ? And again reduce the amount on which to pay tax ?

Finally, If i did sell, would this really need an accountant to sort this out for me ?"

enhancement expenditure is allowable an additional cost and deducted against your sale proceeds. however, indexation would not apply to this as the refurbishment is in 2005.

you may want to use an accountant to formally make the payment for CGT for you and deal with the correspondence, however it is a simple matter of submitting a cheque by 31 October for the amount calculated and inclusion of the comp in the following year on your income tax return. If you can do the calculation yourself well and good, but to be sure you've done it correctly, make sure you check first with someone in the know.

as the solicitor should be closing the deal for you, they may be able to include a draft of the comp to you, if it's money you're trying to save, but don't rely on them.
 
as the solicitor should be closing the deal for you, they may be able to include a draft of the comp to you, if it's money you're trying to save, but don't rely on them.
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Unless your solicitor happens to be also an accredited accountancy or tax professional, you will have absolutely no recourse in the event of any error in their tax advice or calculations. Bear in mind that you may be personally liable for tax arrears, interest and penalties in the event of the Revenue discovering a tax underpament on your part, even if this was a 100% genuine error, and if you similarly overpay your tax due to an error, there is no guarantee that the Revenue will readily agree to refund you without perhaps auditing your case.
 
you will have absolutely no recourse in the event of any error in their tax advice or calculations.
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I beg to differ. Solicitors are trained in CGT and CAT calculations, and have a good grounding in other taxes. Many solicitors are as competent as an accountant in CAT and CGT calculations for the main part and regularly submit such calculations on behalf of clients- and would expect to be liable for any error. Some solicitors do not do such calculations by choice. But many do.
 
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