Using PPR to make money.

noproblem

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I don't know if it's being done on a large scale but I personally know quite a few people who are into buying and doing up houses, living in them for a while and selling for nice profits. There's no tax due on the sales and was wondering when this "hobby" starts getting treated as more than just selling ones PPR? All the people I'm talking about have good jobs but do very well out of this exemption. Is it time to put some tax on the sale of the PPR?
 
Is it time to put some tax on the sale of the PPR?

Why?

In the cases you mentioned, they still would have had only one PPR at any one time.

Most people improve their homes to a greater or lesser extent.

House prices can rise for other reasons.
 
I'm just putting it out there that it might be a good idea for the State to get some additional revenue by having some tax on the sale of the house. In my opinion the asset is allowing people to earn substantial money. If the householder has spent money on the residence then that will be allowed anyway, so will the fact that they can make some money on the sale, but to bank the full amount made is to me a potential honey pot for people and a silly missed opportunity for our country.
 
Hi np

Most people who make money out of "doing up houses" actually make all their money from the general rise in the property market. The money they spend doing it up is not reflected in the increase in price. In other words, if they had just bought the house and not done it up, they would have made more money.

If someone is running a business doing up houses, it would be considered a trade and the profits would be subject to income tax. It's not common enough for Revenue to take any interest in it.

I think it may be discussed elsewhere on askaboutmoney, but it's probably time to review the CGT exemption for PPRs.

Brendan
 
Maybe I should have titled my thread as "Review of CGT exemption for PPR's". Yes, this is what I feel needs doing and won't be surprised to read the overwhelming opposition some may have.
 
I think it would be unfair for a couple of reasons; people who have made improvements probably haven’t kept evidence because there was no need to; people may have followed a particular course of action, e.g. stretched themselves to buy a bigger home because it’s good tax planning; it’s a person’s home, not an income/gain generating asset per se; making it taxable would act as a disincentive to sell at a time when supply is required; an empty-nester would hold until death rather than trigger CGT.

It might make sense to limit the number of exempt disposals over a particular set period.
 
I don't know if it's being done on a large scale but I personally know quite a few people who are into buying and doing up houses, living in them for a while and selling for nice profits.

The property market has picked up only in the past few years.

How many PPRs does an average person own in their lifetime?

People can change their PPRs for numerous reasons :-
  • they have outgrown their starter homes because of family size,
  • their job or a better job opportunity requires them to move either within Ireland or abroad,
  • they want to downsize,
  • they are divorced or separated and the family home is sold,
  • they are too old or infirmed to live by themselves and move in with a family member & give them the sale proceeds to look after them rather than entering a care home, etc., etc.
There is no reason to suppose that the practice you describe is common or even frequent enough to change the tax rules in every case of a PPR sale.
 
I don't know if it's being done on a large scale but I personally know quite a few people who are into buying and doing up houses, living in them for a while and selling for nice profits. There's no tax due on the sales and was wondering when this "hobby" starts getting treated as more than just selling ones PPR? All the people I'm talking about have good jobs but do very well out of this exemption. Is it time to put some tax on the sale of the PPR?

Quite a few people sounds like a lot. How many? And how often did they move home? My sister moved twice, made a profit on the first one, built a McMansion that cost a fortune and then downsized at a loss on the McMansion and is now in a small house that she cannot sell for what she bought it for as it was overpriced. She along with many others would love to be able to offset the losses against taxes.
 
Maybe I should have titled my thread as "Review of CGT exemption for PPR's". Yes, this is what I feel needs doing and won't be surprised to read the overwhelming opposition some may have.

so what would this tax look like? will it include a level at which a certain cohort will pay not tax and people living in expensive houses will shoulder most of the burden?
 
I don't know if it's being done on a large scale but I personally know quite a few people who are into buying and doing up houses, living in them for a while and selling for nice profits. There's no tax due on the sales and was wondering when this "hobby" starts getting treated as more than just selling ones PPR? All the people I'm talking about have good jobs but do very well out of this exemption. Is it time to put some tax on the sale of the PPR?

A rather sweeping statement, that. Once an activity starts looking less like a hobby and more like a business, you can be quite sure that both it and the profits from it are fully subject to all applicable tax laws.
 
The relief is already excluded in the circumstances raised by OP:

http://www.irishstatutebook.ie/eli/1997/act/39/section/604/enacted/en/html

"(14) This section shall not apply in relation to a gain if the acquisition of or of the interest in the dwelling house or the part of the dwelling house was made wholly or mainly for the purpose of realising a gain from the disposal of it, and shall not apply in relation to a gain in so far as the gain is attributable to any expenditure which was incurred after the beginning of the period of ownership and wholly or mainly for the purpose of realising a gain from the disposal."
 
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