Selling property - when, how, and CGT issues

[pernickety]

Hello,
We have decided to sell our property in Dublin which is currently occupied by tenants until end January.As it's quite soon and we do not live in Ireland I have asked the tenants if they wish to renew for 3 months.

I have a few questions:

1. What do you believe is a better time to go to market - Feb or May?
2. If I sign up with an agency to sell, how long does it take to get it "on the market" generally?
3. I had intended to wait until tenants move out to clean it well, touch up paintwork, brew the coffee etc. etc in preparation for viewings. However one agency suggested I should hold viewings while the tenants are still there to avoid missing out on rent. I think I could also ask for a mortgage payment holiday. Would you have a preference one way or the other?
4. I've seen other threads about agency fees and how some people have managed to bargain down to ~1%. Just wondering if this includes VAT or not?
5. Question on CGT: As it was our residence for almost 5 years, is CGT calculated on the original purchase price compared to sale price, or on the valuation at the time of moving out/renting compared to sale price?

Thanks for your help on this.

 

[ClubMan]

5. Question on CGT: As it was our residence for almost 5 years, is CGT calculated on the original purchase price compared to sale price, or on the valuation at the time of moving out/renting compared to sale price?

You don't say how long you have owned it for in total. Let's assume that it was 12 years for want of a more accurate figure. In this case (12 - 6) / 12 or 50% of any resale gain (calculated with reference to the original purchase price and the eventual sale price) net of any allowances and allowable expenses (including indexation of the purchase price up to December 2003 or whenever the cut off point is) is assessable for CGT. Note that intermediate valuations (e.g. at the point in time when the property was initially rented) are irrelevant. Note also that the first 12 months following vacation as your PPR is not liable for CGT. If in doubt get independent, professional advice.

 

[pernickety]

Thanks clubman,
"In this case (12 - 6) / 12 or 50% of any resale gain"
We will have owned it for 8 years

"including indexation of the purchase price up to December 2003 or whenever the cut off point is"
could you explain this, I'm afraid I wouldn't know indexation if it bit me in the a**e!!

"the first 12 months following vacation as your PPR is not liable for CGT"
Is that why you said 12-6 instead of 12-5?

So I should take 8-6/8 = 25% of sale-purchase price (less allowable expenses)??

 

[Art]

Hello,
We have decided to sell our property in Dublin which is currently occupied by tenants until end January.As it's quite soon and we do not live in Ireland I have asked the tenants if they wish to renew for 3 months.

I have a few questions:

1. What do you believe is a better time to go to market - Feb or May?
2. If I sign up with an agency to sell, how long does it take to get it "on the market" generally?
3. I had intended to wait until tenants move out to clean it well, touch up paintwork, brew the coffee etc. etc in preparation for viewings. However one agency suggested I should hold viewings while the tenants are still there to avoid missing out on rent. I think I could also ask for a mortgage payment holiday. Would you have a preference one way or the other?
4. I've seen other threads about agency fees and how some people have managed to bargain down to ~1%. Just wondering if this includes VAT or not?
5. Question on CGT: As it was our residence for almost 5 years, is CGT calculated on the original purchase price compared to sale price, or on the valuation at the time of moving out/renting compared to sale price?

Thanks for your help on this.

1. Go to market in February - the main buying season is end of Feb/ March/ April
2. The agency can put it on the market pretty much straightaway
3. I viewed mine when tenants were there but gave them a reduced rent to encourage them to keep it tidy. Had no problem selling it.
4. The 1% generally does not include VAT. You will also have to pay for advertising on www.myhome.ie yourself.
5. Already answered in previous post

 

[ClubMan]

Thanks clubman,
"In this case (12 - 6) / 12 or 50% of any resale gain"
We will have owned it for 8 years

I am assuming that it was your PPR for the first five years of ownership. If it was rented out within five years of purchase as a PPR then a clawback of stamp duty (see ) applies. Either way (8 - 6) / 8 = 25% of any resale gain is assessable for CGT.

"including indexation of the purchase price up to December 2003 or whenever the cut off point is"
could you explain this, I'm afraid I wouldn't know indexation if it bit me in the a**e!!

It's all explained in [broken link removed]. If you don't know what CGT indexation relief is then you should really get independent professional advice when calculating your tax liabilities and making your returns.

"the first 12 months following vacation as your PPR is not liable for CGT"
Is that why you said 12-6 instead of 12-5?

Yes.

So I should take 8-6/8 = 25% of sale-purchase price (less allowable expenses)??

Yes.

Disclaimer: I am pretty sure that what I have posted is correct but I am basing my comments on potentially partial information and am not a tax expert so always double check and get independent, professional advice if necessary.

 

[pernickety]

Clubman, it was rented after 4.5 years but as it was second hand when we bought we already paid stamp duty.

"always double check and get independent, professional advice if necessary"
Yes of course, but there's nowhere like AAM to get a feel for how things work. Don't know how I lived without it in the past!
If all goes according to plan, I'll be back here looking for investment advice

Art,
"I viewed mine when tenants were there but gave them a reduced rent to encourage them to keep it tidy"
I'm inclined to do viewings with the tenants still there as you did. It means I won't do any touchup paintwork etc. etc but really it would be the easier option. Would you think 10% off rent would encourage big cleaning? Depends on the tenants of course

Thanks for your advice.

 

[ClubMan]

Clubman, it was rented after 4.5 years but as it was second hand when we bought we already paid stamp duty.

Well that changes the calculations for one thing - 4.5 is not 5! For another thing it's possible that you paid less in SD than an investor would have so the balance would be due under the clawback rules. You'd need to check to be sure what outstanding liability, if any, you have in this respect.

 

[pernickety]

I obviously do need financial advice when the time comes, but in the meantime I can dream of what I'll do with my extra money (I had expected to pay about 20% CGT on sale minus purchase price until someone told me differently! )