Capital Gains Tax

Ivor_Guddon

looking at selling a house , been rented out 12 years

bought for €345000 with €16000 Stamp duty back in 2007

owe less than €200,000 now

should sell for €350,000 to 370,000 going by comparitive homes in area

am i right in saying capital gains tax is only on the profit off the home ? ie bought for €361000 and sell for €370,000 tax liable on €9000 profit ?

Geuze

Yes, it's a tax on the capital gain, that's why is called Capital Gains Tax.

https://www.revenue.ie/en/gains-gifts-and-inheritance/transfering-an-asset/index.aspx

Capital gain = sale proceeds less base costs

Base cost = 345k + allowable expenses, e.g. sol fees on purchase.

Check whether SD is an allowable expense

Sale proceeds = sale price less allowable expenses

Geuze

Is SD paid on purchase an allowable expenses for CGT purposes?

https://www.google.com/search?q=is+stamp+duty+an+allowable+expense+for+cgt&rlz=1C1GCEU_enIE1040IE1040&oq=is+stamp+duty+an&gs_lcrp=EgZjaHJvbWUqBwgBEAAYgAQyBggAEEUYOTIHCAEQABiABDIHCAIQABiABDIHCAMQABiABDIHCAQQABiABDIHCAUQABiABDIHCAYQABiABDIHCAcQABiABDIHCAgQABiABDIHCAkQABiABNIBCDQ2NjJqMGo0qAIAsAIB&sourceid=chrome&ie=UTF-8

https://www.shanahan.ie/taxation/capital-gains-tax#:~:text=In%20calculating%20the%20amount%20of,%2C%20solicitors%2Fauctioneers%20fees%20etc.

dennyk

https://www.boards.ie/discussion/2058355626/capital-gains-tax

Was it your PPR before you rented it out? If so, the time it was your PPR plus the last 12 months of ownership will reduce your CGT liability proportionally. Note that if it was never your PPR, however, then you are not eligible for any partial CGT relief, not even for the last 12 months before you dispose of it.

Ivor_Guddon

https://www.boards.ie/discussion/comment/122252748#Comment_122252748

never my residence , i don't mind paying the capital gains tax , just wondering roughly how much

as i said 345,000 purchase price + 16000 stamp duty ( as wasnt my first purchase ) so total cost 361,000 plus say 5000 solicitors fee's so 366,000

sell for approx 370000 so profit of 4000

tax just liable on that ?

Peregrinus

On those figures, yes, your chargeable gain is 4,000.

Yes, the stamp duty can be counted as part of the acquisition cost.

Plus, you can also deduct any costs you incur in the disposal - solicitor's costs, estate agent's commission and costs, etc.

paulpd

You need to reduce the gain by your annual exemption too of €1,270 (assuming you haven't used it yet)

Taxable gain is then c.€2,730 @ 33%

Ivor_Guddon

https://www.boards.ie/discussion/comment/122253690#Comment_122253690

i owe 195000 and selling for 370000 , i wont complain about a small fee if im receiving 175000 in my acc for me

3DataModem

Don't forget that the fees for selling (solicitor, estate agent) are deductible from the sale price too, for calculating CGT.

Congratulations on your (hopefully) profitable investment.

I'm curious (if you don't mind sharing here) as to what your cashflow was during the 12 years… i.e. you put in a deposit, stamp duty, etc and presumably had to subsidise it month-to-month (mortgage, tax, upkeep)… any idea what that total's to?

Ivor_Guddon

https://www.boards.ie/discussion/comment/122296402#Comment_122296402

rented and luckily only paid 3 months mortgage on it since 2007 , so paid for itself

ted1

https://www.boards.ie/discussion/2058355626/capital-gains-tax

deduct the cost of sale and other costs. Did you spend money enhancing the property ? Did you pay advertising fees? Estate agent fees? Solicitors fees?

You won’t owe anything

OO7FITZY

appreciate any fedback on this:

bought house 2007 - 295k

(PPR) lived in it until end 2014

Rented from beginning 2015 (registered on RTB)

looking to sell now but earlier this year had to get in landscaping company to (replace fencing, tree removal and patio relaid, new side gate) (Cost 15k) - this is why I'm selling plus too much hassle to manage for very little return!

expect to sell for 315k by end of this year

Question - will the 15k job in back gardin be deduced for the CGT payable on the 20k gain (315k-295k)

DFB-D

https://www.boards.ie/discussion/comment/122439830#Comment_122439830

Run it by your accountant, but it does not appear any of the 15k meets the criteria of enhancement cost.

JVince

https://www.boards.ie/discussion/comment/122439830#Comment_122439830

Legal fees and sales fees are deducted.

Legal fees on the purchase are also deducted.

Landscaping costs in preparation for sale would be allowable once you can show you have had no benefit from it.

Even if there is a net gain, only half of it would be subject to CGT as you lived in it for almost 8 years (plus one year that revenue do not count)

So if you sold for 330k and 10k legal and selling expenses and 15k landscaping in the year of sale done for the purposes of selling, your net gain would be 10k, of which 5k is subject to cgt, less 1270 allowance = 3730 @ 33% - circa €1250

In other words - feck all

DFB-D

https://www.boards.ie/discussion/comment/122440261#Comment_122440261

Unlikely landscaping is deductible - they were all presented as repairs by the OP rather than enhancements.

As a rule of thumb, it must add value which was not already present - so a patio which was already there but in poor condition is repaired if new slabs are laid. If it were a significant upgrade in surface area or quality of stone, then perhaps it can be considered an enhancement.

OO7FITZY

OK, so they key requirement is to present the work as an enhancement done for the purposes of selling?

Failing the enhancement option can I offset it against the tax paid for rental income this year as repairs carried out?

The work done has to fall into either categaory, is that correct?

DFB-D

https://www.boards.ie/discussion/comment/122443805#Comment_122443805

There are rules and practices for either tax, you should steer away from trying to classify it yourself.

Some repairs might be claimable under IT, provided they took place during the rental period. Some costs are claimable in between lettings, but none post letting. I would say little of what you presented could be claimed under IT as they does appear to be capital expenses.

For CGT, replacement costs can be tricky to claim as enhancements, let me give you an example of replacing windows. The standard window 50 years ago was single glazed, today it's double glazed = replacement cost. If you put in triple, maybe claim enhancement and so on.

There is other things I am leaving out, but your accountant is the best person to make a judgement call on what's claimable.

OO7FITZY

understood but sounds a bit subjective and dependentent on the accountant viewing the submission

I had a look on revenue.ie for a list of what is or is not included for both scenarios and nothing clear emerged

JVince

https://www.boards.ie/discussion/comment/122445357#Comment_122445357

Yes it is subjective.

As above, if you upgrade for a bog standard concrete slab to sandstone and also upgraded the fence to a superior quality and the previous fence would have been fine with a lick of paint, then it would likely be allowable. Similar on the tree removal - if it was not necessary but you reckoned the removal enhanced the value of sale, it may be allowable.

Pictures of the garden 10 years ago would assist in the decision