Can you accept cash to lower buyer's stamp duty?

We were pleased to find a buyer for our house relatively quickly and the whole process has been very smooth. However, the buyer has now suggested to us that she would like to pay some of the cost in cash - €25,000 in a private arrangement between us. She hasn't said, but I know that if she does this then the house will fit into the 6 per cent stamp duty bracket and not the 7.5 per cent. Does this happen much? What do other sellers do in the same position? Such tax-free cash is obviously tempting.

Hopefully other sellers walk away from such an offer because it's illegal. It is essentially a method of defrauding the Revenue Commissioners and you can imagine how kindly the taxman takes to that. There's nothing in it for you. If your house is your principal private residence then you are in the happy position that every penny you get for it is completely free of Capital Gains Tax (CGT). If this house is an investment property you will be liable to CGT but, like most investors, you will have to accept this as a business cost to do with the property investment. It's interesting that you say she wants to keep it as a private arrangement, because both your solicitor and hers wouldn't touch it with a bargepole - same goes for the estate agent.

All professionals are now hyper alert "to cash under the counter deals" because they know the trouble with the Revenue that such transactions can result in. Leaving aside the question of how anyone can amass such an amount of cash, what would you do with that much cash? Lodging it in your bank account is likely to trigger queries because of the tight money laundering legislation we have. And then you could find yourself in a lot more hassle - for nothing.

Can I avoid CGT on my investment property?

I own an investment property which I currently rent to tenants. I am proposing to move into this property for the next one to three years and am wondering whether a liability to Capital Gains Tax will arise when I sell it after this period. I have been told that a gain on the disposal of a principal private residence is exempt from CGT but I am worried that the fact that the property was formerly used as an investment property will mean that it will not qualify for this exemption.

The answer to your question is in the first line - this is an investment property - or at least has been for whatever number of years. Just because you move back in for a while doesn't rub out its history as an investment. It will therefore be treated as such by the Revenue Commissioners and you will have to pay Capital Gains Tax. However, as you intend living in the property as your principal private residence for a couple of years, the CGT tax will not be applied to the entire proceeds of the sale, instead it will be reduced accordingly to reflect your occupation. It's a complicated calculation, involving indexation and one that your solicitor or tax advisor will calculate at time of sale.

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