Rent or sell? Unmortgaged property but may have CGT liability.

B

Black_ray

Registered User
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Hi,

Apologies in advance, this is a bit of a mixed bag but I'm hoping to get some clarity on what my choices are. The background is as follows:
  • I own a house that I'm using as a holiday home, but find I'm getting less and less use from it.
  • At the time of purchase (1997) myself and my father were joint purchasers (Total price IR£59,000 in 1997). My father has since died and the house is fully owned by myself, no mortgage.
  • It was never my principal residence.
I live a long way from the property and if I decided to rent it out I would need the services of a management agency to look after queries and maintenance. The house is already furnished and I'm a PAYE worker (so is my wife).
I estimate an monthly rent of approx €550 or a sale price of around €150k.

It looks to me that rental, by the time all costs and taxes are taken into account, will be worth less than €2k per year (see below), if I'm calculating this right.
If I look at selling the property, as I've never lived there I'm concerned at the tax implications. This is the core of my query: is there a CGT or other tax liability if I sell and how much would it be?
A secondary question if it's OK - am I off the mark on the rental figures or is there something I'm missing? This really isn't my game and I have no exposure to it, but if I'm right I think I'd prefer to take the sale.

Thanks in advance for any help or advice you can offer.

Rental income 550 x 11 = €6050

Maintenance/Repairs = €1000
Management fees = €600
Insurance = €600
Agency fees and miscellaneous = €250
Costs = €2450

Gross profit = €3650
Net after tax approx. = €1825
 
It is subject to CGT.

The base cost will have two parts
1. 1/2 the 1997 price plus costs.

2. 1/2 the value of the property when you inherited it from your father.

There may be some indexation on both costs depending on the year he died.
 
Thanks for the quick response!

He died in 2014 and the property was worth around €115k at the time.
Is there a handy resource on the indexation and CGT anywhere?
 
[broken link removed]

1997/98 multiplier is 1.232

So 1997 approx €75,000 / 2 =€37500 x 1.232 €46,147

2014 €114,000 / 2 = 57,000

Base cost €103,147

Proceeds €150,000 less legal less auctioneer €145,000

Gain 41,853 - 1,270 = 40,583 x 33% = €13,392.
 
Joe - thanks very much for the detailed response - it's a big help in making a decision.

Appreciate the help.
 
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