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Property Tax Advice

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  • 04-01-2008 9:59pm
    #1
    C.J.
    Registered Users Posts: 18 ✭


    Hi,
    I was wondering if anynone could help me. I bought my current home 1 1/2 years ago as a first time buyer so without stamp duty. I am now looking to buy a family home with my wife but I was wondering about tax implications. I was thinking of keeping my home for another while as it's on a fixed mortgage until later this year, so I was thinking of renting it perhaps. I know that if I sell it within 2 years of purchase it will be subject to stamp duty clawback. So I was wondering what would be the best way to approach this. Would it be better to buy the new home as an investment property while mantaining my current home as primary residence? And if so, would it be possible then, once the first home is sold, to make the new property into a primary residence and avoid caital gains tax?
    Any advice would be really appreciated!!

    Many Thanks,

    CJ


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    #2
    Cantab.
    Closed Accounts Posts: 1,444 ✭✭✭Cantab.


    C.J. wrote: »
    Hi,
    I was wondering if anynone could help me. I bought my current home 1 1/2 years ago as a first time buyer so without stamp duty. I am now looking to buy a family home with my wife but I was wondering about tax implications. I was thinking of keeping my home for another while as it's on a fixed mortgage until later this year, so I was thinking of renting it perhaps. I know that if I sell it within 2 years of purchase it will be subject to stamp duty clawback. So I was wondering what would be the best way to approach this. Would it be better to buy the new home as an investment property while mantaining my current home as primary residence? And if so, would it be possible then, once the first home is sold, to make the new property into a primary residence and avoid caital gains tax?
    Any advice would be really appreciated!!

    Many Thanks,

    CJ

    Surname isn't Haughey by any chance is it?


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    #3
    C.J.
    Registered Users Posts: 18 ✭C.J.


    You got me. I'm new to this Internet thing :D

    Any advice short of me getting a new username? :)
    Cantab. wrote: »
    Surname isn't Haughey by any chance is it?


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    #4
    The_Conductor
    Moderators, Society & Culture Moderators Posts: 32,285 Mod ✭✭✭✭The_Conductor


    First of all- renting out your current property will also trigger a tax liability- by way of a clawback of your stampduty waiver, as its no longer your PPR. Purchasing your new house as an investment property- will not entitle you to favourable mortgage interest relief (as its assumed that you would be renting it out, and the interest in full would be deductable from your rental income on the house before determination of your taxable income on the house).

    To be honest- your best course of action, if you are insistent on moving at present, is most probably to take the hit on the chin, sell your current abode, pay the clawback, and then claim the full Mortgage Interest Relief on your house.

    Note: unfortunately you'll no longer benefit from favourable stamp duty unfortunately, as your current apartment will have exhausted both your and your wife's FTB status. If you only bought your current house/apartment in the last 18 months- it is quite possible that there are no CGT complications at all (the only tax obligation on the old house being the stamp duty clawback), but you would need to consult a property solicitor who knows the ins and outs to decide on your best course of action. (If you are putting the proceeds of one PPR towards a new PPR in a calendar year, it doesn't trigger a CGT obligation on the proceeds of the original PPR). Shane


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