Capital Gains Tax - Have to pay ?

vixdname · 18-09-2022 9:06am #1

Hi all,

My inlaws moved abroad in 2005 after selling their family home after all the kids had moved out etc.

They lived solely abroad until 2010 when they bought a small town house back home so as theyd have a base here for when they came home.

They lived between both their foreign home and their house here then until 2018 \9 but mainly abroad.

They were home when the Covid pandemic arrived in Jan. 20'and had to remain home until late 21' when they went back abroad to look after and get maintenance carried out on their foreign home.

Whilst living abroad they paid their usual bills, such as water, electricity, car tax etc and have receipts for same.

Now, in 2022, they sold their foreign home as they are too old for the journey and upkeep and have made approx 50k on the sale ie Bought in 2005 for 132k Sterling and sold in 2022 for 182k Sterling.

The proceeds from the sale are due to be transferred into their Irish account shortly.

My question is, is considering their foreign property was indeed their "Full Time" home up until the pandemic, with them only going to their Irish home for a few weeks at a time when visiting previous to that, are they still liable to pay Capital Gains Tax ? Their foreign home was their full time home and I believe theres no CGT to be paid if the property they sold was their full time home, but I stand to be corrected on that.

If this is correct however, how are they best able to prove that this was their full time home ? and would the fact they had a house here in Ireland as a base be held against them ?

I hope my post is clear enough, and appreciate any info or suggestions.

Thanks all !

dennyk · 18-09-2022 3:26pm

Revenue have the rules for the Principal Private Residence relief here. If they were primarily living in the foreign home for most of that time, they'll be able to claim relief for most of it. The exemption is applied proportionally to the entire gain, so, as an example, if they lived in it as their primary residence for 14 years, then lived here for 3 years, then sold it after 17 years in total, they'd be able to claim relief on 15/17ths of the chargeable gain (the 14 years they lived in it plus the last 12 months before it was sold). As such, they'd only owe CGT on about 6k of that 50k gain under those circumstances (possibly a bit less due to their personal CGT exemption, if they had no other capital gains this year). So worst case they'd probably be looking at a little over a couple thousand euro in CGT, give or take. Obviously they'd need to run the numbers themselves based on the exact dates and amounts involved and there might be some exchange rate fluctuation calculations to take into account and such; check with an accountant if you need advice on how to calculate the correct amount.

It's not necessary to submit evidence of their residence in the property up front when filing; their own declaration that the property was their PPR during that time will suffice when filing their CGT return. They should make sure they have something available to show just in case Revenue ever audits them in the future, however. Anything which would prove their residence in the location in question would likely do; things like household bills, health records, insurance, bank statements, anything that shows they were actually present and living in the other country at the address of the property in question during the periods in question.

vixdname · 19-09-2022 7:39pm

https://www.boards.ie/discussion/comment/119634190#Comment_119634190

Thats a really helpful answer, and very much appreciated.

Thank you so much.

Capital Gains Tax - Have to pay ?

Comments