Tax considerations on selling the family home.
An interesting query came in a few weeks ago, from a client who is planning to spend the next few years working in Australia (where most of his family is based). He needed guidance on the tax implications of selling his family home here in Ireland versus renting it out for a few years.
1. Immediate sale of the family home
Principal Private Residence Relief (PPR) relief exempts from Capital Gains Tax (CGT) any gain arising on the disposal of a person’s PPR. This is one of the most frequently used CGT reliefs. We informed the individual that if he had occupied the property as his only or main residence throughout the period of ownership then any gain on the sale would be exempt. Periods of non-occupation need to be stripped out of the exempt part of any gain on disposal + certain periods of non-occupation where one is away for work reasons qualify as occupation (few boxes to be ticked here).
The last 12 months of ownership are also treated as a period of occupation regardless of use which is very helpful as the sale for example could take a number of months to close.
2. Postponing the sale of family home in Ireland and renting it out
The individual was planning to rent a home in Australia. The Irish property would therefore no longer be his PPR but rather an investment property (and the period of rental would = non occupation). The taxation of non-resident landlords is a blog for another day but very simply income tax is due and payable on the Irish rental income.