Claiming tax back on a build

NickTellis

We're hopefully kicking off our extension / attic conversion within the next 6 - 8 weeks and included in the build will be an office in the downstairs extension for my wife who's self-employed. I was wondering if its possible for her to claim any tax back on the build as a legitimate business expense?

Any help or advice appreciated.

muffler

Moved from Construction & Planning.

NickTellis

To?

muffler

Taxation. Where else

deemy

Id love to know the answer to this too. Planning same over next year or 2. Ta

dbran

Hi

Yes it is possible but you will lose your exemption for CGT on your principle private residence for that portion of the house that is used as an office.

So yes you can, but you may not want to.


Kind Regards

dbran

deemy

excuse my ignorance but what is CGT???

testicle

deemy wrote: »

excuse my ignorance but what is CGT???

Capital Gains Tax

NickTellis

dbran wrote: »

Hi

Yes it is possible but you will lose your exemption for CGT on your principle private residence for that portion of the house that is used as an office.

So yes you can, but you may not want to.


Kind Regards

dbran

How exactly does that work?

namenotavailablE

Normally when you sell your house you don't pay tax on any profit arising [profit is calculated using CGT rules and may involve indexing the original cost of the house and deducting same from sales price] so long as the house has been used as your 'principal private residence' for the period of ownership.

However, if you use say 20% of your house as an office, then you would be taxable on 20% of the profit arising. Adjustments would be made if you used 20% of your house as an office for less than the full period of ownership.

wishful thinker

Regards the last post and PPR (Principle Private Residence) relief from CGT if you sold your home, you should note the following.

It could be argued (and have done so) for example that this room/office was used by all the family and not just as an office - more of a family room than an office, then it would still be part of the PPR and not a seperate office.

However, if this is a full time office, well then simply it would mean a CGT charge when/if you sold your PPR.

Excaptain

NickTellis wrote: »

We're hopefully kicking off our extension / attic conversion within the next 6 - 8 weeks and included in the build will be an office in the downstairs extension for my wife who's self-employed. I was wondering if its possible for her to claim any tax back on the build as a legitimate business expense?

Any help or advice appreciated.

Looking at advice given it seems people are advising on possible CGT liabilities should you sell your house, is that what you are after?
I'm not sure if you can claim for a capital allowance on the 'office build' but certainly you can claim relief on the portion of light & heat etc used by the office. Ring revenue or get someone qualified that will advise you correctly.

Mr. Incognito

Hmmmm, I normally lock property threads as a rule but I'll allow this on one condition. DO NOT RELY ON THE INFORMATION GIVEN IN THIS THREAD, and speak to a professional.

When you sell your principal private residence a relief from Capital Gains Tax arises where you have lived in that house.

Page 15 refers:

http://www.revenue.ie/en/tax/cgt/leaflets/cgt1.pdf

Private Residence
Full relief
A gain on the disposal by an individual of a dwelling-house (including grounds of up to one acre) is
exempt in certain circumstances. The exemption is available if, throughout the individual’s period of
ownership, the house had been occupied by the individual as his/her only or main residence or, under
certain circumstances, as the sole residence of a dependent relative. In the case of a married couple
living together only one house can qualify as the only or main residence of both spouses.
Partial Relief
w Full exemption may not be due if only part of the house has been used as the individual’s residence, in
which case an apportionment is made to arrive at the exempt portion of the total gain. This may
happen where the house is used partly for business purposes or where rooms in the house have been
let.

So, by building an office for business purposes this may fall outside the remit of PPR relief if and when you sell your PPR.

Capital Allowances that are incurred in a trade can be offset against the Case 1 or Case 2 Income. That is the expenditure incurred in the build can be set against the income from the trade. This is apportioned on a time period depending on when it was built and unused allowances can be carried forward to future periods.

Where professional advice is need is to weigh up the benefit of the capital allowances against the income in the trade and see whether it is worth claiming it. Capital Allowances are not automatic- you must claim them. If it is a small home office not generating much income then it most likely is not worth claiming the capital allowances as you could take a huge hit on future CGT costs.

I think I have explained that as succiently as I can. In short there is no easy answer- go seek a professional to let you know what is more beneficial having regard to your own facts.