Renting Main Residence, at a loss

To get back to the question which is "what is the tax liability from conversion to letting"?

Assume no change in the price of €400k. There have been 29 years of sheltering a gain of €261k as per @Boyd 's calculations.

Every year you let the property you expose 1/30 of the sheltered gain to CGT, so about €8k. 33%*€8k is just under €2,700.

So letting the house immediately begins to accrue a CGT liability, a material share of the rent from letting.
 
NoRegretsCoyote said:
To get back to the question which is "what is the tax liability from conversion to letting"?

Assume no change in the price of €400k. There have been 29 years of sheltering a gain of €261k as per @Boyd 's calculations.

Every year you let the property you expose 1/30 of the sheltered gain to CGT, so about €8k. 33%*€8k is just under €2,700.

So letting the house immediately begins to accrue a CGT liability, a material share of the rent from letting.
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NoRegretsCoyote said:
To get back to the question which is "what is the tax liability from conversion to letting"?

Assume no change in the price of €400k. There have been 29 years of sheltering a gain of €261k as per @Boyd 's calculations.

Every year you let the property you expose 1/30 of the sheltered gain to CGT, so about €8k. 33%*€8k is just under €2,700.

So letting the house immediately begins to accrue a CGT liability, a material share of the rent from letting.
Click to expand...
I presume if you use the rent a room scheme you must flie a return, and pay 500 euro or 4% prsi contribution ?
 

Rent a room tax relief scheme

Rent-a-room relief makes it possible to earn tax-free rental income when you rent out a room in your home to private tenants.
www.citizensinformation.ie www.citizensinformation.ie

As per above, rent a room income is not liable for USC, PRSI or income tax but you must file a return.
 
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bbound said:
Thats a massive difference compared to if the owner had lived in it for 1 year only and rented for remainder. The tax would be 1/35 x 315k =9k so taxable gain is 315-9 = 306 @30% = approx 92k! tax
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House was rented from 1995 to 2001, if the rental period started on 30th November 1994 and finished on 1 Feb 2002, so an extra two months,
how would you calculate this ?
to answer setanta12 question
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jpd said:
This was included in my answer above - € 50k x 1.7 indexation = € 85k but maybe I should have said € 50k x 1.7 indexation relief = € 85k
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My uncle built an extension to the house in 2001 that cost 14k because he done a lot of the work himself, builders quotes were starting at 26k, but he never kept any receipts for materials or labour, is it worth his time trying to get replacement recepits ? does the 14k spent make any meaningful difference to the calculations ?
 
I doubt that he will get receipts from 2001 - but if he did, the gain would 14K x 33% x 29/35 = 4k approx
 
jpd said:
I doubt that he will get receipts from 2001 - but if he did, the gain would 14K x 33% x 29/35 = 4k approx
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Hi jpd
thank you for the calculation,
if the rental period was 76 months, can you give an example of how you work this out,
 
you need to calculate
A = number of months you owned the property
B = number of months the property was your Principle Private Residence - the last 12 months are always considered PPR even if you did not live there

A / B * 100 = % of the gain for which you get PPR relief
 
jpd said:
you need to calculate
A = number of months you owned the property
B = number of months the property was your Principle Private Residence - the last 12 months are always considered PPR even if you did not live there

A / B * 100 = % of the gain for which you get PPR relief
Click to expand...
This is all new to me, my uncle does not use the internet, so appreciate your help jpd,
so keeping the same figures except rental period increased to 6yr 4mts.
(35 *12=420) 344/420 * 315 = 258
315 - 258 = 57 * 3.0 = 17k
using months the result looks about right ?
 
Correct - but don't get hung up about getting the figures accurate down to the last penny for planning purposes - the unknowns such as the selling fees could easily be out by + or - 3k euro so worrying about whether it's 6yrs and 4mths or 6yrs and 5mths is nor worth it
 
jpd said:
Correct - but don't get hung up about getting the figures accurate down to the last penny for planning purposes - the unknowns such as the selling fees could easily be out by + or - 3k euro so worrying about whether it's 6yrs and 4mths or 6yrs and 5mths is nor worth it
Click to expand...
Good to understand how to do the calculation, thanks again jpd
 
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