To sell or not to sell?

[Lyndan]

Hi All

Looking for some advice. We have our apartment up for sale at the moment and its going nowhere - our original plan was to sell up and get a house but I've been offered a job abroad and we are now thinking either sell up and bank the equity or keep it and rent it out. Its hard to decide which to do because they both have positive/negative outcomes.

To rent out the apartment we will owe the revenue - 20k in stamp claw back. We will then be non resident landlord which I believe means you pay 20% tax on all earnings...does anyone know if this is just on money earned over your mortgage payment? Then if we rent it out and sell after 2 years are we then liable for capital gains?

Has anyone else any experience of the above? Can you share thoughts with me?

Cheers

 

[Nige]

Your tax liability on rental income (if you are non-resident) is 20% of the rental profit, which is the rent less mortgage interest and rental expenses. However, unless you use a rental agent, your tenants will be obliged to withhold 20% of the gross rent and pay this over to the Revenue. When you do your tax return, you should then be due a tax refund.

If you rent the property and sell it without having returned and lived in it, you will be subject to CGT on any gain (at 20%). However, the proportion of the gain subject to tax will be reduced by the proportion of time you spent in the apartment (plus an extra year) over the total ownership period.

If you return to live in the property, you will not be subject to CGT on a later disposal. Alternatively, if a "dependent relative" or widowed parent moves into the property, their period of residence will be treated as if you were living there.