Do I need to pay Capital Gains Tax in ROI when I sell my self-build?

Q: Is the sale of a family home always exempt of CGT? Is there a threshold formula to determine whether there has been a lot of profit made on the sale of the house? 

A: Each case must depend on its own entire facts; however, in general terms, full or partial relief from capital gains tax (CGT) is available where an individual disposes of his or her principal private residence (PPR) including land, up to one acre, around the house. CGT may, however, apply where an individual has not resided in the house for a sufficient period of time prior to its sale for it to be regarded as his or her residence. In addition, if an individual self-builds a number of houses and sells them, that individual may be treated as carrying on a trade and would be liable to income tax on the profit from the sales. In order to qualify for full relief, the owner must occupy the property as his or her residence for the full period of ownership.  Where the property is not so occupied during the whole period of ownership, only the proportion of the gain applicable to the period of occupation is exempt. Certain periods of absence during which an individual was prevented from residing in his or her property are treated as periods of occupation if, both before and after those periods, the property was occupied by the individual as his or her only or main residence.  These are:

• Any period throughout which the individual worked in an employment or office all the duties of which were performed outside the State, or
• Any period, not exceeding four years, or any periods which together do not exceed four years, throughout which the individual had to reside elsewhere due to his or her place of work or a condition of employment.

Partial exemption may be claimed where the home has been let at any point during the period of ownership.  The Rent-a-Room scheme does not affect entitlement for full exemption. An individual may sell their home and the land up to one acre around it for its development value.  In this case, the exemption will only apply to the value of the house or land without its development value. CGT may have to be paid on the value of the house or land over that amount. Additional information is available here on the Revenue website. The above applies regardless of whether the house is a self-build or not. If the house is not considered a PPR, CGT will apply to the gain made on the sale of the property at a rate of 33 per cent. The gain is calculated on the difference between the cost of the site/building costs and the sale price. Costs relating to the acquisition of the site and sale of the property are allowed in calculating the amount of CGT due. Additional information is available here on the Revenue website.

— ROI Revenue Press Office

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