liability for capital gains & Stamp on immediate Resale of an apartment

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MonkeeMan

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Hi,
I signed up for an investment apartment over a year ago and now find it wont be ready until next January, 12 months late. In the mean time I have found a new house that I want to buy to move into but it is quite expensive. I can get a loan for it but don’t want to put too much money into servicing it so I now think I will sell the apartment once it is ready so that I am not too exposed to the market as I am keeping my current residence. I know that people will have various opinions on me selling the apartment but I don’t want to get into it on this thread.

If I take on the apartment as an owner occupier I don’t have to pay stamp duty.

Would it be possible to effectively move into the apartment for a few weeks as an owner occupier so I don’t have to pay 15000 in stamp and then sell it on and use the profit (approx. 100000) to pay off some my main residence. If I never rent the property will I avoid stamp duty on the profit.

Would there be any claw back on the stamp duty avoidance if I sold on.

As a background I am currently in my 4th year in my current residence and am looking to buy a 2nd hand home to live in which I will be paying Stamp on anyway so I don’t have to indicate how I will use that property once I own it.

Thanks.
 
So come January how many principle private residences will you have, 1, 2 or 3? Revenue will only accept you having 1. You could chance your arm with moving into the apartment for a couple of weeks and so declaring it to be your PPR but I think it's quite obvious that it's not since you may have already declared it to be an investment when you first signed the contracts (??) and Revenue aren't stupid, far from it. I would imagine it to be quite obvious too that you are effectively making a business from buying and selling property.

1. If you turn your current place from being your PPR into a rental property before you've owned it for 5 years you'll be liable for whatever stamp duty should have been paid initially for an investor on it.

2. Buying and selling the new apt within a couple of weeks will quite obviously be a business transaction and Revenue may catch you on it, thus incurring stamp duty and CGT and the profits.

Why not just flip the apartment now and delaying buying a new house till you've owned the old one over 5 years?
 
Thanks for the feedback Howitzer - just to try and clarify what is a bit of a messy situation.

I would imagine it to be quite obvious too that you are effectively making a business from buying and selling property.

Not at all – I only bought the apartment so that I could keep pace with inflation for when an ideal family home came along – unfortunately the delay in the apartment has messed things up as that house has come along before the apartment was ready and the vendors wont wait until I have sold my current PPR.


1. If you turn your current place from being your PPR into a rental property before you've owned it for 5 years you'll be liable for whatever stamp duty should have been paid initially for an investor on it.
I realise that but it will only be 20% of the original amount as I am there nearly 4 years.

2. Buying and selling the new apt within a couple of weeks will quite obviously be a business transaction and Revenue may catch you on it, thus incurring stamp duty and CGT and the profits.

If you don’t rent it out and use the profit to pay off a mortgage on an even new PPR then does time make a difference – the revenue states that CGT exemption applies to “A gain on the disposal of a principal private residence including grounds of up to one acre is exempt, provided the house had been occupied by the individual as his/her only or main residence during the individual's period of ownership.”

Does anyone have any experience in doing selling on a property after a short time?

Why not just flip the apartment now and delaying buying a new house till you've owned the old one over 5 years?

It’s a bit of a mess, I have found a house that we really want to live in for the rest of our lives but the vendors wont get in a chain so I can’t sell my current residence immediately to pay for it. Of the two non PPR properties I will then be left with the apartment is the one I would be most willing to sell as I believe my current house is a better rental property.
Is it possible to sell on the apartment before the sale has closed??

As I will be doing up my new house when I get it then it may not be liveable by the time the apartment is ready so I see no reason why I can not make the apartment my PPR for a short time.

Anyone else’s experience with a similar situation would be appreciated.
 
MonkeeMan said:
I realise that but it will only be 20% of the original amount as I am there nearly 4 years.
Click to expand...

I'll let others with personal experience comment on the rest but in this case you are incorrect in your assumption. You'll owe stamp on the entire cost, not 20% of it.
 
I am not clear on your intentions. Could you summarise what you see as the status of the 3 properties starting with now, ending with what you want the final picture to be, and showing the status of the three properties along the way.

e.g.
Now:
Current House: PPR
Proposed Apt: No contracts signed yet
New House: On the wish list

Tomorrow:
Current House: PPR
Proposed Apt: Proceed without change for now
New House: Make offer

Next Step:
Current House: ???
Proposed Apt: ???
New House: ???

Next Step:
Current House: ???
Proposed Apt: ???
New House: ???

At end:
Current House: Sold
Proposed Apt: Sold
New House: PPR

I think it is important to outline all of the intermediate steps because that will affect what advice is offered.

Sorry if that information is already in the previous posts, but I have found it hard to draw the picture.
 
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