Property Clinic: Your CGT liability will depend on a variety of factors, including when you bought the property
I purchased a rental house in December 2014 with the intention of returning to Ireland. The tenant has vacated the property. I intend to sell and purchase in a different part of the country. What is the capital gains tax (CGT) liability likely to be at this time?
There is a CGT relief for property acquired under an unconditional contract between December 7th, 2011 and December 31st, 2014, Suzanne O’Neill writes. Full relief applies where the property was owned for at least four and up to seven continuous years, writes Suzanne O’Neill.
Where the property is owned for more than seven years, as in this case, the CGT relief will be tapered, and the seller will get relief for seven out of the total years of ownership, eg eight years if sold in December 2022. The taxpayer (seller) should calculate their capital gain as if there was no relief for the sale and multiply by 7/8 (based on the example) to exclude the exempt part and arrive at the taxable gain.
The taxpayer should also remember to utilise their annual exemption of €1,270 when calculating their taxable gain, if not already utilised in 2022. The resulting gain will be subject to CGT at 33 per cent.
As a non-resident vendor, a form of tax clearance, a “letter of no audit” will be required by the solicitor prior to distributing the proceeds of sale. Of course, other taxes should also be paid up to date, including income tax on the rental income and local property tax.
Published in The Irish Times. Answered by Suzanne O’Neill, Tax Partner at RSM Ireland.