Rent a room scheme vs capital appreciation on a PPR

ClubMan said:
As ever, be wary of the tax tail wagging the investment dog... :)
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It's an interesting question.

I've watched tax policy evolve for the last 15 years or so. As a result I have a subjective range in my head of where the various rates and bases will lie in another 15 years from now.

These subjective ranges for tax are a lot narrower than where I think the S&P500 or Irish house prices will be.
 
Hi lads sorry but it's all I could find in the topic...I live in my house,I'm renting rooms out but am over the 14000,so will need to pay tax etc on it...but will it effect my capital gains tax on any profit on house,I know if under 14000 it doesn't,but I'm in the house but getting more then 14000,Thanks
 
Ranger2626 said:
but will it effect my capital gains tax on any profit on house
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Most likely, yes.

Principal Private Residence (PPR) Relief

This page outlines Principal Private Residence (PPR) Relief
www.revenue.ie www.revenue.ie

Restriction if only part of your property was used as a home​

You can only claim for the part of the house you used as your home. For example, you might have used half your house as your home, and half for your business. You can claim exemption on half of the chargeable gain.

Rent a Room Relief will not affect your claim for full exemption.
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Ranger2626 said:
Why is that clubman,and not if I stay under 14000
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Because you wouldn't be qualifying for the Rent A Room scheme and its exemptions in relation to rental income tax and CGT.
Ranger2626 said:
Would I need to leave the house vacant for a year before I sell it,?
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Why do you think that this would help in any way? If you have any (partial) liability for CGT then this isn't going to make any difference. And where are you going to live?

That's my understanding but I am not a tax expert so get independent professional advice if necessary.
 
It might be easier if you cut the rent, so the income falls below 14k.



Principal Private Residence (PPR) Relief

This page outlines Principal Private Residence (PPR) Relief
www.revenue.ie www.revenue.ie


Principal Private Residence (PPR) Relief​

A Principal Private Residence (PPR) is a house or apartment which you own and occupy as your only, or main, residence.

You will be exempt from CGT if you dispose of a property that, for the entire period of ownership, you:

  • lived in it as your main residence
  • used all the property as your home.
This exemption also applies to land, up to one acre (0.405 hectares), around a house. This excludes the site of the house, which is not taken into account when applying the relief.

PPR Relief is restricted if you did not fully occupy the property or the sale price has development value.

Note

The last 12 months of ownership of a PPR is considered to be included in your period of occupation.

This allows for the possibility that you have moved into your new home, but have not sold your previous home.

Restriction if only part of your property was used as a home​

You can only claim for the part of the house you used as your home. For example, you might have used half your house as your home, and half for your business. You can claim exemption on half of the chargeable gain.

Rent a Room Relief will not affect your claim for full exemption.
 
You can only claim for the part of the house you used as your home. For example, you might have used half your house as your home, and half for your business. You can claim exemption on half of the chargeable gain.
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That by the way is a gross oversimplification of the position.

The issue is exclusive business use.
 
A literal reading of the above Revenue text would imply that if you once used your kitchen to do a bit of paperwork connected to your business, you would permanently lose PPR relief on your kitchen, or more exactly the % of your home that the kitchen comprised.

How do they get away with publishing utter nonsense like that?
 
Ok I understand now,so even years ,15 years ago if you rented rooms it would still effect your cgt,is it because your not using the whole house,I thought once your living there ,the cgt would be exempt
 
Ranger2626 said:
I'd find it hard to get below the 14000 as od need to kick someone out onto the street and I'm not like that to be honest
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Then I guess you'll just have to deal with whatever consequences might arise in terms of rental income tax and CGT because you can't avail of the Rent A Room scheme?
 
Ok thanks I understand better now,if I'm over the 14000 though let's say 18000,so need pay tax roughly 9000,can I claim expenses against this 9000,eg like I pay the electricity,bins ,wifi so let's says that comes to 4000,do I pay tax of 5000 then?
 
There are some previous threads on live in landlords and taxation in case they are of any use.


You should probably get professional accountancy/taxation advice for your specific situation.
 
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