My wife and I own an apartment in Dublin and a house down the country. We mostly live in the apartment and visit the house for about 20 weekends per year — about 80 days in total. I would hope to sell the house if and when the market picks up and also to designate it as my principal private residence (PPR) to avoid paying CGT. Can I do this given that I principally do not live there? Also, if I was to let the house does this compromise the CGT derogation? I paid the NPPR tax on the apartment.
You should obtain specialist tax advice before trying to designate the house your principal private residence (PPR). If you do not principally live in the house, it is not your PPR.
According to Revenue, an individual’s principal private residence at any time is the building or part of a building occupied by the individual as his or her only or main residence: during the period of 12 months ending with that time, or where the building was more recently acquired, from the time of acquisition to that time.
The principle of the rules governing capital gains tax (CGT) exemption for PPRs is that the gains made on your main residence or the sole residence of a dependent relative are exempt.
You and your wife can only have one PPR between you. There are rules governing how long you can live away from the PPR, eg a period of up to 12 months immediately before the end of the period of ownership is treated as a period of occupation even though you may not have been actually living in it during that period.
Other permitted circumstances for living away from the house that do not invalidate its status as your PPR include: time when you worked outside the State; a period up to four years when it was a condition of your employment that you lived elsewhere provided the house was still your only main residence and no other house was eligible for exemption; and specific conditions relating to nursing home care which do not apply to your case.
Paying the NPPR on another property does not satisfy the requirements of the CGT exemption rules for claiming the house as your PPR. Renting out the house would ensure that it could not be regarded as your PPR. Your accountant should be able to advise you in greater detail.
Simon Stokes is chair of the residential property professional group of the Society of Chartered Surveyors Ireland , scsi.ie