Maximising CGT benefit from house move

[Billy Baltic]

We recently purchased a house which will shortly become our PPR.
Our existing PPR has been put on the market.
That house will be selling at approximately 50% of its purchase price.
From what I have read there is an exemption to CGT for a move of house.

My question is:
How do I get revenue to see my old house as an asset from a CGT perspective?

My hope would be to use the drop in value of the property to offset gains in shares which I have.
If this is possible how long can I carry forward the loss on the property against CGT on the shares?

Also, does anyone see any mistakes in my thinking?

 

[Lexicon]

I don't think your loss on the sale of your ppr can be used as a cgt loss. If You owned the house but it wasn't always your ppr then the gain/loss is pro-rata apportioned for the non ppr period.

As far as I know a cgt loss can be carried forward indefinitely.

 

[Billy Baltic]

Thanks Lexicon.

So if I've held the property for 10 years and I decide to leave it unoccupied for 1 year before I sell (and thereby cement the expected 50% loss) how much of the loss can I attribute to that year?

In reality I would expect the loss in that specific year to be negliable as prices in my area are static.

 

[ronaldo]

Thanks Lexicon.

So if I've held the property for 10 years and I decide to leave it unoccupied for 1 year before I sell (and thereby cement the expected 50% loss) how much of the loss can I attribute to that year?

In reality I would expect the loss in that specific year to be negliable as prices in my area are static.

I'd imagine none. The Revenue guide to CGT exemption on a PPR states:

The exemption is also restricted where the taxpayer has not lived in the house for long periods. However, a period of up to twelve months immediately before the end of the period of ownership is treated as a period of occupation even though the owner may not have been actually living in it during that period.

If selling the asset would be exempt from CGT, it suggests that losses wouldn't be allowable for CGT purposes.

Have a look at page 33 of this guide for a sample calculation of CGT due (a calculation would probably be similar to calculate the losses you can carry forward): http://www.revenue.ie/en/tax/cgt/leaflets/cgt1.pdf

In other words, it looks like it would only be after one year of the house not being your PPR that you would start to build up an allowance of CGT losses to be carried forward.

So, if you lived in the property for 8 years and then moved out for 2 years before selling it, only 10% of the loss is likely to be allowable for CGT purposes - as you lived in it for 8 and the final year is classed as a period of occupation.

The above is my reading of it anyway.

 

[Joe_90]

I'd agree with the last poster.