Selling house that was rented out - tax estimate?

M

MichaelCOH

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Hello everyone,

Would appreciate any advice/opinions on my situation.

I bought my own home in Cork in June 2005, the mortgage was E262,000 and runs for 27 years.

But following the death of my mother I moved back home to take care of my elderly father in February 2008 and rented out my home.

Apart from a four month spell in 2009, the house has been rented out since.

My father died earlier this year and so I have to make a decision on what to do next. The family home, which I shared with my father, has to be sold and the proceeds split between myself and my two brothers.

I had hoped I would have some breathing room before the family home was sold, but there was nothing in the will stipulating this - but the solicitor tells me that the grant of probate won't come through for six months so I should have that much time any way before having to leave. I have no wish at all to remain in the family home, it is just that I would have to give my tenants six months notice, so my home wouldn't be free until then.

What I am hoping to be able to do, though, is sell my own home to move to Galway.

But I am wondering how I would be fixed tax-wise after selling my home because I rented it out for most of the time since I bought it?

An estate agent has told me that I would probably get around E270,000 for it, nor far off what I paid for it, so I'm lucky.

Would anyone have a rough idea of what tax I would pay on that?

My mortgage at the moment is E1,300. I am a PAYE worker on a salary of E60,000.

Would be grateful for any advice, thank you.
 
ALMOST 11 YEARS RENTAL INCOME THERE SO FAR. Have you been paying tax on your rental income up until now, have you registered with the relevant authorities, etc, etc, etc. Anything in your mortgage contract saying you could or couldn't rent? More information needed in order to answer your question.
 
CGT is paid on any gain made on the sale of an asset.

You don't state what you paid for the house, so we can't say if you made a gain or not.


Income tax may be owed on the rental income, you don't mention anything about that.
 
There'll be no capital gains tax on the sale.

You're selling it for €270k and your base cost is obviously more than that, so no gain.

Presumably you've been paying income tax along the way and you paid that NPPR charge when it was around and things like your PRTB registration.
 
noproblem said:
ALMOST 11 YEARS RENTAL INCOME THERE SO FAR. Have you been paying tax on your rental income up until now, have you registered with the relevant authorities, etc, etc, etc. Anything in your mortgage contract saying you could or couldn't rent? More information needed in order to answer your question.
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Thank you for replying. I'm the half sensible one in the family, tax paid on all rental income from year one, unlike my brother who now has a monster of a Revenue bill for unpaid tax. Registered with the PRTB and all Household/Property Tax charges paid, everything up to date. Honestly not sure whether there was anything in the mortgage contract saying I couldn't rent.
 
Protocol said:
CGT is paid on any gain made on the sale of an asset.

You don't state what you paid for the house, so we can't say if you made a gain or not.


Income tax may be owed on the rental income, you don't mention anything about that.
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Thank you for replying Protocol.

Apologies - I paid E282,000 for the house.

Tax fully paid and up to date on rental income, all other charges paid through the years - PRTB, property tax, etc.

I'm hopelessly ignorant on CGT, don't know how it's calculated. Is it just on purchase price v sale price? Or do they take in to account whatever gain I might make once my mortgage repayments are taken in to account? Also, because it was rented out for most of the time, would I not be taxed on that, because it wasn't my primary residence? Please forgive my ignorance!
 
How many times do I have to post the same thing?!

You have no capital gains tax exposure.

If there's a gain, things like PPR Relief can dilute it or eliminate it, but if you're selling something for less than you paid for it, even Revenue would struggle to create a capital gains tax liability!
 
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Gordon Gekko said:
How many times do I have to post the same thing?!

You have no capital gains tax exposure.

If there's a gain, things like PPR Relief can dilute it or eliminate it, but if you're selling something for less than you paid for it, even Revenue would struggle to create a capital gains tax liability!
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Thank you GG. Again, because I have been renting out my house (the rent never covered the mortgage through the years) I didn't know if that would result in me being taxed on the sale, regardless of profit or loss. Thanks again.
 
MichaelCOH said:
Thank you for replying Protocol.

Apologies - I paid E282,000 for the house.

I'm hopelessly ignorant on CGT, don't know how it's calculated. Is it just on purchase price v sale price? Or do they take in to account whatever gain I might make once my mortgage repayments are taken in to account? Also, because it was rented out for most of the time, would I not be taxed on that, because it wasn't my primary residence? Please forgive my ignorance!
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It's simple: sale price minus the purchase price = gain

Mortgage is totally irrelevant.

Yes, there are adjustments if it was your PPR.

But in your case none of this matters, as you made a capital loss.
 
Protocol said:
It's simple: sale price minus the purchase price = gain

Mortgage is totally irrelevant.

Yes, there are adjustments if it was your PPR.

But in your case none of this matters, as you made a capital loss.
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Perfect, thank you Protocol, greatly appreciate your replies and information.
 
Sorry for the added question, but would it be possible to make a rough estimate on what my profit/loss might be if I sold my house?

Bought it for: E282,000

Asking price if sold now: E270,000

Mortgage: E262,000

Total amount repayable over 27 years: E406,000

Average monthly mortgage repayment: E1,300

Thank you.
 
Two separate issues: the investment issue and the financing issue.

On the investment issue, you lost 12,000 in nominal terms.

Think of the interest you paid as the price of renting the money to buy the house.

If you were a tenant, you would have to pay rent.

A tenant rents a house.

An owner-occupier rents money.

So I would not include interest in the gain/loss calculations.
 
And the offset of that loss against other gains would be partially restricted, on the basis that the property was your home for a period.
 
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