Selling house

[LizW]

We bought a house and lived in it for 4 years then let it out while we bought and lived in a new one (for nearly 4 years). Unfortunately we weren't really aware of tax laws back then and didn't ever declare the (miniscule) income we got for renting it out. We have just sold the house and made a profit on it. a) Do we have to pay tax on it and b) what will happen about the fact that we have been renting it out and doing nothing about it?

[Ian McTernan CTA]

You will need to declare the sale of the old house on your Tax Returns, and obviously the Revenue may then come back and ask you what was happening in it for the four years you lived in the other property. You need to make a voluntary declaration of the income and expenses to the Revenue before you submit the Return including the sale. As the net income was 'miniscule' this should not result in a large tax bill, but the Revenue can impose penalties for late submission of Returns if you did not file, late notification penalties and penalties on any tax loss as well as interest on any tax loss.

As far as any gain on the property goes, in the absence of an election as to which property was your PPR then you will have 4/8ths PPR exemption, plus 3 years and then the let property exemption (possibly), and then annual exemptions, so there may be no gain left in charge after all of that!

Would suggest you appoint a professional adviser to deal with the voluntary declaration as soon as possible- I specialise in this sort of case.


Ian McTernan CTA
McTernan Associates Ltd
Chartered Tax Advisers
ian@imcternan.com