Moving house but not selling PPR immediately

Bruno Mannheim

Currently looking at moving, in the fortunate position that we dont need to sell our PPR which is mortgage free to fund the purchase of the house we intend to move to

Plan is to take our time, pick the right house for us, buy the new house with savings etc and if any renovations needed get them done in advance of moving

When we are ready to move we will then put our current home on the market

Would we be liable for a CGT hit on the current PPR as for a short period we will own two houses?

Thanks

DubCount

I think you get 12 months grace period at the end.

dennyk

As per Revenue, occupancy during the last 12 months of ownership of your PPR is assumed by default even if you didn't actually live in it during that time, in order to account for the time it takes to sell the place after you've moved out.

Owning a second home doesn't directly affect the PPR status of the home that you are actually living in. Only one of those homes can be your PPR at any given time, though; if you are still living in your old house while doing up your new one, your new house will not be your PPR during that time. Once you've moved into your new house, it would then be considered your PPR from that point, but the time between when you closed on the sale and the time you actually moved in and established residence there would reduce the PPR relief you're able to claim if you later sell the place. For example, if you buy a house for 200k, wait one year to move in, then live in the house for four years, and sell it five years after you first bought it for 300k, your chargeable gain would be 100k, but since it was occupied as your PPR for four of those five years, you can claim relief on 4/5ths of that gain (80k), meaning you'd only pay CGT on the remaining 1/5th (20k) (less your personal annual CGT exemption of €1270 if applicable).

Toots

Jumping in on this because we are planning something similar, but it's because our current PPR is in negative equity. Am I right in thinking that the CGT liability is on profit for the sale ie if we just sold it for enough to clear the outstanding mortgage balance then we wouldn't have a capital gains liability?

Vestiapx

Toots wrote: »

Jumping in on this because we are planning something similar, but it's because our current PPR is in negative equity. Am I right in thinking that the CGT liability is on profit for the sale ie if we just sold it for enough to clear the outstanding mortgage balance then we wouldn't have a capital gains liability?

Is the price you paid for it less that what it would sell for now ? If so then there is no profit. In the case of a profit is exempt for the years you lived in it as your ppr as per the example in this thread .
Mortgage is irrelevant in most if not all cases.

Toots

Vestiapx wrote: »

Is the price you paid for it less that what it would sell for now ? If so then there is no profit. In the case of a profit is exempt for the years you lived in it as your ppr as per the example in this thread .
Mortgage is irrelevant in most if not all cases.

Bought it in 2006 so there's no way it would sell for anything close to what we paid for it. We paid 330k and it's probably worth 200k now if we're lucky.

dennyk

Whether you make a gain or a loss is irrelevant in the case of your PPR, assuming you qualify for the full relief, i.e. you were using the entire home solely as your home and occupying it accordingly for the entire duration of ownership (aside from the last 12 months before you dispose of it). You would not pay tax on any gains in that case even if you did sell it for more than you paid for it, but because any gains from disposal of that asset would not be subject to tax, you also cannot use any losses from its disposal to offset other capital gains or carry forward to future years.

In the event that you didn't occupy the home for the entire period of ownership (e.g. you let it out for a few years while living elsewhere) or you used part of the home for other purposes (e.g. running a business), you would only be eligible for partial PPR relief, and as such, if you sell at a loss in those circumstances, you'd be able to claim the relative portion of that loss that would have been subject to CGT (were it a gain) to offset other capital gains or carry forward. For instance, if you used half your home for operating a business, or you let your home out for half of the time you owned it, and you realised a €100k loss when you sold it, you'd be able to claim a €50k loss to offset any other capital gains in the current year or future years.

The mortgage itself doesn't affect your gain or loss when selling a house; it's based solely on the full price paid for the property at purchase and the full price you sell it for (minus certain allowable expenses associated with the purchase and sale in the case of a capital gain, such as agent's fees).