Renting your flat out before you sell no longer costs you the two-year exemption

Zero on a residential flat or house, including attached land, held for more than two years. Five per cent on the same property sold inside two years. Twenty per cent on non-residential property — bare land, commercial premises, warehouses — and also on hotel rooms sold within a hotel business and on the assignment of rights under a preliminary purchase agreement. That last category catches people who buy off plan and sell the contract before completion, so anyone planning that route should price the 20% in rather than assume the residential treatment.

This is the change that matters most to owners who have been sitting on an empty flat rather than risk the tax position. Temporary renting, or using the address as a registered business address, does not remove residential status or cost you the two-year exemption. What does is systematic activity: property development, real estate trading, an organised and consistent pattern of buying and selling. The line is drawn at behaviour, not at a single let, and the Revenue Service is reported to be looking harder at high-frequency transactions.

The taxable gain is the sale price less the purchase price, and documented costs that directly increased the property's value — renovation, construction — can now be deducted as well. Previously such costs were generally not taken into account. For anyone who bought a shell and finished it, that is a material difference, and it turns on paperwork: invoices, contracts, bank records. Keep them from the start, because a cost you cannot evidence is a cost that does not reduce the gain.

On a self-built house the two years run from registration of ownership of the completed structure. In a swap arrangement, from the moment title to the finished flat is secured. Property inherited or received as a gift from a first-degree relative is generally tax-free, and the previous owner's holding period can be added to yours. Splitting one unit into two cadastral units keeps the original acquisition date for both; merging two is assessed separately, so a part held under two years is still caught. Unfinished property keeps residential status if the project designates it as residential and the ownership rights actually pass.