Capital Gains Tax when selling principal residence

antiskeptic

Could anyone inform me what the capital gains tax situation would be for the following scenario?

Let's say I'm renting at the moment but buy a house for 100k and add an extension/make it habitable for 50k. At that point I can sell it for 200k or move into it myself, rendering it my principal residence.

I assume I'd have to pay CGT at 33% on the 50k profit if I sold it once it was done up. But what happens if I move in? How long do I have to occupy it in order not to have to pay CGT? Or is there some kind of sliding scale - the longer I occupy the less CGT I pay, in which case how does that work?

Thanks in advance..

anti

p.s. I got onto Revenue and they suggested I write in but that they typically didn't deal with hypothetical cases :cool:

Godge

http://www.revenue.ie/en/tax/cgt/reliefs.html


"A gain on the disposal of a principal private residence, including grounds of up to one acre is exempt, provided the house had been occupied by the individual as his/her only or main residence during the individual's period of ownership.
This exemption is restricted where the house was part let or part used for business or the individual did not reside there for long periods (with the exception of the Rent-a-Room Scheme introduced in Finance Act 2001) or where the house or gardens are sold for development purposes"

http://www.revenue.ie/en/tax/cgt/leaflets/index.html

Example 5 on page 32 of leaflet CGT1 gives an idea of how to calculate what tax would be owed in a situation similar to yours.

Victor

What makes you think you can sell at a profit?

antiskeptic

Victor wrote: »

What makes you think you can sell at a profit?

Precedent. I know what done up versions of these houses have been going for. Buying price + doing up price = profit left over.

antiskeptic

Godge wrote: »

Example 5 on page 32 of leaflet CGT1 gives an idea of how to calculate what tax would be owed in a situation similar to yours.

From the Revenue Guide to CGT

Example 1: Sale of investment property
Example 2: Sale of development land
Example 3: Sale of principal private residence which is development land
Example 4: Sale of part of garden attaching to main residence
Example 5: Principal Private Residence relief where owner has not spent all of period of ownership in dwelling
house
Example 6: Sale of shares including FIFO rule
Example 7: Sale of shares including Bonus Issue of shares
Example 8: Sale of shares including Rights Issue of shares
Example 9: Sale of shares including Rights Issue/Shares of a different class
Example 10: Purchase and sale of an asset in Foreign Currency[/quote]



None of the examples seem to apply to my case.

If I bought a house as principal private residence today, occupied it for a month and sold it at a profit then I'd be no different than someone bought in 1990 and sells today at a profit - other than we differ in the duration of our ownership. Both have occupied the property for the duration of their ownership. Example 5 is aimed at establishing what level of occupancy is required in order to call the property one's PPR where occupancy is less than 100% of the length of ownership

There is no CGT (that I know of) for the owner/occupier who bought in 1990. And can't see any means by which the person who bought a month ago would be dealt with any differently by Revenue.

Glenbhoy

Given it would be the only residence you own, I don't think there'd be an issue. Many people purchase houses and continue to rent whilst renovating the property, the fact that you then decide to sell it on would be irrelevant, as you say, it's no different to many.
Obviously there hasn't been much of this going on in recent years, but time was flipping was all the rage.

You may of course have difficulty getting the finance, but that's another story.