A reader is buying a home with her sister before trying to sell her own place and is worried about capital gains tax. Photograph: iStock
Is there a grace period for CGT if my house is not sold at the same time that we complete the sale of the new property?How do we go about buying our first home?Housing chains are one of the big, but generally unavoidable, headaches of modern home purchase. You are moving on and you want to buy your new home but, for most of us, that means selling the current one without finding yourself homeless in the middle of the process.
Bringing all the various vested interested into line for a closing date takes time. Unexpected hiccups will emerge and that inevitably throws things out of kilter forcing a reset for everyone. Capital gains tax is charged on the increase in the value of an asset between the time you buy it and the time you sell it. It is levied at 33 per cent over and above a tax free threshold gain of €1,270 that you can make in any individual tax year.
Those are the general rules. However, for most people, capital gains tax is not an issue when it comes to their family home as there is a general exemption from capital gains tax liability for what Revenue calls your principal private residence. And, interestingly, that extends to the last year of ownership regardless of whether you are living there, it is lying empty or even if it is being rented.