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I bought a rental property in 2014. How much tax will I have to pay if I sell up now?

Property Clinic: Capital gains tax relief is tapered where properties are purchased between December 2011 and December 2014 and owned for over seven years

Full tax relief is applied where the property was owned for at least four and up to seven continuous years. Where the property is owned for over seven years, as in this case, the CGT relief will be tapered. Photograph: Isabel Infantes
Full tax relief is applied where the property was owned for at least four and up to seven continuous years. Where the property is owned for over seven years, as in this case, the CGT relief will be tapered. Photograph: Isabel Infantes
Suzanne O'Neill
Wed Oct 12 2022 - 06:00

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 capital gains tax (CGT) relief for properties that are purchased under an unconditional contract between December 7th, 2011, and December 31st, 2014, writes Suzanne O’Neill. Full relief is applied where the property was owned for at least four and up to seven continuous years. Where the property is owned for over 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 costs of acquisition and disposal (ie auctioneer’s and solicitor’s fees) are allowed to be deducted when computing the gain (profit) that you made on the property. The taxpayer should also remember to make use of their annual exemption of €1,270 when calculating their taxable gain, if not already used in 2022. The resulting gain will be subject to CGT at 33 per cent.

Online filing

The capital gains tax liability realised on a property sold between January 1st, 2022, and November 30th, 2022, is due for payment with the Revenue Commissioners on or before December 15th, 2022. This payment can be made online on the Revenue Commissioners’ website. The capital gains tax information will also need to be included on your income tax return (Form 11) for 2022, which is due to be filed on October 31st, 2023, which is normally extended to mid-November for online filers.

It is also important to ensure that you have paid relevant income taxes on your rental income up to the date your tenant vacated the property. This income should also be included in your 2022 income tax return along with any relevant expenses and capital allowances.

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Suzanne O’Neill is a tax partner at RSM Ireland

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