My parents are thinking of gifting to me what was the family home and I'm just trying to figure out Capital Gains Tax. The house was bought in 78 for 12k. They own it but have not lived in it since 07, it has been rented. In 07 it was probably worth 250k but now only 100k. Is cgt applied to the difference between what theY bought it for and what it's worth now? Or is it applied to the difference between purchase and what it was worth in 07 (last time it was their PPR) OR are they exempt from CGT up to 07 as it was Principal Private Residence and cgt is applied from 07 to now which in effect is nothing as it has lost all it's 07 value? I've a feeling question 3 would be most unlikely, but the info on revenue is hard to discern for a joe public like myself. Will seek professional advice if going ahead but any information from contributors here would be greatly appreciated.
CGT is based on the gain over the entire period of ownership, so the difference in value between 1978 and 2012. The value in 2007 is irrelevant.
In calculating the gain, the cost in 1978 will be indexed for inflation; depending on whether it was bought before or after 6 April, this factor will be either 4.148 or 4.49. Based on your 12k cost (assuming that's a € figure), then the indexed cost would be in the region of 50k - 55k.
If they ever did structural enhancement work, such as an extension, the cost of this enhancement can be added to the cost above.
Assuming no enhancement, the gain over the period of ownership will be around 45k - 50k.
Having established the amount of the gain, you then apply the PPR relief; the house was owned for 34 years, it was occupied as a PPR for 29 years, and the last year of ownership is always deemed to be a period of occupation, so that's 30 out of 34 years as a PPR.
Therefore 30/34, or 88.2%, of the gain will be exempt from CGT, which would be 44k exempt if the gain is 50k.
So, a taxable gain of 6k. And your parents have an annual exemption of 1,270 each from CGT, so this reduces the 6k to 3.5k, which @ 30% is around €1,000.
The figures above are purely illustrative, and you'll need to get a competent professional to deal with the matter to keep the liability to a minimum.