Would Capital Gains Tax be Due, when sold, if I Purchased House...?

zoe

I'm living in Northern Ireland, and I own no property at all. I'm living at my mums.

If I purchased a house in the republic, with the intention of moving to it permanently at some point in the future, would capital gains tax be due if and when I sold it?

If and when I sold it I would be resident in the house and so tax resident in the republic and it would be my main, and only, residence.

But there would have been maybe a few years when I first purchase it when I was not permanently resident in it. At no point would the house be rented out.

Thanks for any advice

Nuttzz

if its your PPR (primary place of residence) then no CGT would be due

zoe

The reason I'm not sure if because when purchased it wouldn't be my PPR, and would not be for a 2-5 years.

My permanent place of residence is my mums house.

Though it would be my PPR when it came to selling it in the future.

When it came to selling in the future, would capital gains tax not be due on the first few years when the house was not my PPR? Even though I would have been living permanently in Northern Ireland during the first years of ownership, and own no other property...

kluivert

PPR - Principle Private Residents

No CGT would be applicable.

zoe

Even though for a few years at the beginning of ownership it would not be my PPR...? (though no other property ever owned)

MG

Exemption for PPR is available if “throughout the individual’s period of ownership, the house has been occupied by the individual as her only or main residence”

However, there should be some partial relief available if you do actually reside there in the future.

I’d ring the tax office to check it out properly as there are rules and execptions to the rule on residence which may help you – they are generally very helpful.

zoe

Thanks MG

That's what I was thinking - that CGT tax would be due on the first few years in which I would not reside in the house permanently, even though I would be living in Northern Ireland, and own no other property.

I'll give them a ring to find out for definite...

ronbyrne2005

cgt will be payable on a percentage basis of chargeable gain.so if you didnt live in it for first 5 years and then live in it for 20 years you would have to pay cgt on 5/25ths or 20% of the gain.you will have to pay income tax if you rent it out.

zoe

Thanks - that's what I was thinking...

So if I wasn't living permanently in it for the first 5 years (and it wasn't rented out), but I lived in it for the next 20 on a permanent basis, when it came to selling it, (assuming CGT tax is then 20%), then the CGT tax would be 5/25 of 20% of the gain.

i.e. 20% of 20%
= 4% of the gain

And does this apply even though I would not have owned the house in which I *am* permanently resident, and do not own other property?

Just wondered..., but I'll be ringing Revenue on Monday to find out

Nuttzz

who would be in it for the first 5 years if it isnt going to be rented out?

if you are selling it in 25 years time i cant see much interest being paid to who was living in it for the first 5 years (personal opinion)

zoe

The 5 & 25 year figures were just figures suggested by "ronbyrne2005" in an earlier post.

It'd probably be more like 3 years, but 5 and 25 were used just for ease of clarifying calculation...

And I mightn't even keep it for a total of 25 years, it might only be 10. Who knows...

No-one would be living in it on a permanent basis for the first 3? years of ownership.

Obviously I'd be going to it quite regularly, but the important thing is that it would not be my permanent residence as I'm living at my mums house, which is in Northern Ireland. So I suppose this is considered my permanent residence.

Nuttzz

i think (stress think) that you wouldnt be done for CGT in the situation outlined above, they are really after the renters/property investors more so