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CGT on PPR

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  • 06-03-2018 1:16pm
    #1
    downtheroad
    Registered Users Posts: 3,051 ✭✭✭


    Hi all, I am considering renting out my house for a couple of years with the intention of moving back into it at a later date, as there is a chance that I will be moving overseas. I do not want to sell the house.

    I am curious about any future CGT liability if I do this. From Revenue's website I see that "If you let your home at any point that you owned it, you can claim a partial exemption. The Rent-a-Room scheme does not affect your claim for full exemption."

    Does anybody know what the formula or calculation is on this? Also, is there a time period after which it lapses? I am struggling to find much information on it.

    Thank you.


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    #2
    Michael D Not Higgins
    Registered Users Posts: 7,223 ✭✭✭Michael D Not Higgins


    It's a simple ratio of the length of time rented v owner occupied. As an example, say you've owned your house for 3 years, then rent it out for 2 years, you get the CGT relief for 3 of the 5 years. If the house rises in value by 50k you'd have to pay CGT on 20k at 33%, 6.6k.


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    #3
    downtheroad
    Registered Users Posts: 3,051 ✭✭✭downtheroad


    Thanks a million Michael D - so basically the longer I own and don't rent it the better. And if I only rent it out for say 2 years and own it for 40 then my CGT exemption won't be too badly affected.
    Cheers for the help!


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    #4
    Michael D Not Higgins
    Registered Users Posts: 7,223 ✭✭✭Michael D Not Higgins


    There are more complicated factors for inflation, any cost of disposal, personal exemption, etc. which you should consider when selling your property and I'd advise you to get a tax accountant to actually work out what's owed. I even made a mistake above in that were you to sell directly after renting, the last 12 months would also be considered occupied and you would not incur CGT on that year.

    However, in general, yes the longer you own it and the shorter you rent it, the less CGT you will have to pay.


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    #5
    Luckysasha
    Registered Users Posts: 1,042 ✭✭✭Luckysasha


    Surely CGT only applies to the profit you make after selling. For example you buy a house in 2005 for €225k and sell tomorrow for €250k then your only liable for CGT on the €25k profit you made ?


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    #6
    Michael D Not Higgins
    Registered Users Posts: 7,223 ✭✭✭Michael D Not Higgins


    Luckysasha wrote: »
    Surely CGT only applies to the profit you make after selling. For example you buy a house in 2005 for €225k and sell tomorrow for €250k then your only liable for CGT on the €25k profit you made ?

    Yes, minus any relief allowed.


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    #7
    4ensic15
    Banned (with Prison Access) Posts: 4,691 ✭✭✭4ensic15


    Luckysasha wrote: »
    Surely CGT only applies to the profit you make after selling. For example you buy a house in 2005 for €225k and sell tomorrow for €250k then your only liable for CGT on the €25k profit you made ?

    It is only on the profit but it is the profit on the total period of ownership with pro rata deduction for the amount of time it was owner occupied. It is not the change in market value from the time it was let until the letting ceased.If a house was bout in 2005 of €250k and was let until 2012 by which time it had a market value of €150 and then owner occupied until 2019 when it had a market value of €300 the capital gain is on the €50k difference despite the fact that there was no rise in value during the period it was let.


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