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TonyTax
TonyTax, Tax Consultant
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i have a question re capital gains tax but wish to understand

Customer Question

i have a question re capital gains tax but wish to understand whether I need to look at Irish revenue legislation as well. I moved to the republic of ireland in jan last year.
I have a house in the UK but would like to gift it to a close family member. I have been renting out the property since july 2012. do i need to apply uk or republic of ireland legislation re the capital gains calculations?
many thanks
Submitted: 2 years ago.
Category: Tax
Expert:  TonyTax replied 2 years ago.

Hi.

Can you confirm whether the property has ever been your main residence and/or let please. Are you intending to say in Eire permanently?

Customer: replied 2 years ago.


I intend to stay in the irish republic for at least the next 6 years. The property was my main residence between august 2010 and june 2012


 


i understand irish tax law is more strict regarding capital gains tax and am not sure if this is still applicable in my situation.

Expert:  TonyTax replied 2 years ago.
Which close relative do you intend to give the property to? How long have you owned it?
Customer: replied 2 years ago.

i have owned the property since august 2010 and would like to gift it to my sister


 

Expert:  TonyTax replied 2 years ago.
Thanks.

Leave this with me while I draft my answer.
Expert:  TonyTax replied 2 years ago.

Hi again.

I cannot give you any detailed advice on the Irish tax position but there is some useful information here. There are allowances for the property having been your main home but you would need to take local advice as to your precise Eire tax position.

As far as UK tax is concerned, you should have no CGT to pay even though you will be treated as having "sold" the property to your sister at the open market value as you are "connected" to her for CGT purposes. The reasons that you will have no UK CGT to pay are as follows:

1 You are non-UK resident and provided you give it away by 5 April 2015 and don't return to the UK permanently before 6 April 2018 the gain would not be taxable in the UK. After 5 April 2015, gains made by non-UK residents on property in the UK will be taxable in the UK though the finer details are yet to be worked out.

2 If you returned to the UK before 6 April 2018, the gain for the period that you lived in the property will be exempt from UK CGT as will the gain for the last three years of ownership when you were not living there. That is, provided you give it away by 5 April 2014. After that date, only the gain for the last 18 months of ownership where you are not living in the property will be exempt. Letting relief would cover some or all of the remaining gain.

 

Take a look at the HMRC helpsheet HS283 for more information on the main residence and CGT.

I hope this helps but let me know if you have any further questions.

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