CGT - Capital Gains Tax on house sale

Parrot2019 · 03-04-2022 12:25pm #1

Hi

In the scenario of one quarter owner buying out another three owners, how is the CGT calculated? They have already paid IT (Inheritance Tax) up to a certain value, which is now less than the current value.

I take it, the 3 sellers need to absorb the CGT after costs have been taken into account, between the value IT was paid on originally and current sale price?

EXAMPLE: IT paid on value of 160k, now selling for 220k to one of the co-owners, therefore CGT payable on difference of 60k after costs have been deducted for solicitor, estate agent, etc. by the 3 sellers?

Clarification greatly appreciated.

mickdw · 03-04-2022 2:00pm

So person 4 is paying 165k to the other 3.

15k gain for each of the 3 less €1270 CGT exemption less costs etc.

Roughly a net 50k in pocket for each of the 3.

Atlantic Dawn · 03-04-2022 12:34pm

Would the initial value in question not be €120k between the 3 sellers as the buyer owns the other share?

Parrot2019 · 03-04-2022 12:52pm

https://www.boards.ie/discussion/comment/118874092#Comment_118874092

The value in the example I have given above of 160k is what IT was paid on, the sales price in the example is 220k, therefore there is a CGT liability. I want to establish how this is calculated when one owner is buying out the other three owners. There is a 60K increase in value before costs are deducted and CGT applied.

I want to establish how CGT is applied in this type of a scenario?

mickdw · 03-04-2022 12:54pm

I'd imagine you would work it out on a per person basis' both the inheritance side and now the CGT side.

So if whole house was inherited at 160k, they inherited 40k each.

Selling - is it being sold for 220k to buy out the 3 other shares meaning the whole house would really be worth circa 290k

Or is 220k the full market value and the quarter share holder is buying out the others for 165k?

If 1st scenario, the 3 receiving money from the sale would owe CGT on difference between 73333 and 40000.

If 2nd scenario, the 3 receiving money from sale would owe CGT on difference between 55000 and 40000.

That would be my understanding - costs and any upgrade works deducted also.

Parrot2019 · 03-04-2022 12:59pm

https://www.boards.ie/discussion/comment/118874176#Comment_118874176

220k full market value, so there is a slight increase per owner of 15k (55k less 40k), therefore it would be 15k less costs less CGT per owner? I had thought that way initially and then wasn't sure, so I wanted to clarify.

Parrot2019 · 03-04-2022 7:21pm

https://www.boards.ie/discussion/comment/118874419#Comment_118874419

Yes that's it in a nutshell ... cheers!

Boards.ie: Niamh · 06-04-2022 10:27am

Moved to Taxation forum.

CGT - Capital Gains Tax on house sale

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