Downsizing means selling your current home and buying a smaller, usually cheaper, one, often to cut running costs, release equity, or reduce maintenance later in life. The big tax point in your favour: because the home you are selling has been your main residence, the gain is normally exempt from Capital Gains Tax under Principal Private Residence relief, so the money you free up is usually tax-free. Budget for the costs on both sides, and plan the timing carefully.
Downsizing (sometimes called "rightsizing" or "trading down") is both a financial move and a life decision. The mechanics are a sale and a purchase happening close together, so it is worth understanding the tax, the costs, and the order you do things in.
The tax position is usually favourable
- Selling your home: if it has been your only or main residence throughout, the profit is exempt from CGT under Principal Private Residence (PPR) relief. For most people downsizing the family home, there is no CGT on the sale, and the equity you release is yours. There is no separate "downsizing relief" in Ireland; the PPR exemption is what does the work.
- Buying the smaller home: you pay stamp duty on the new purchase at the normal rate (1% up to €1,000,000), plus the usual buying costs.
If the property you are selling was not your main home throughout (for example you let it for a while), CGT may apply to part of the gain, see the Capital Gains Tax guide.
The costs on both sides
Downsizing is a sale and a purchase, so you carry both sets of costs: - Selling: estate agent fee (about 1% to 2.5% plus VAT, or sell privately with Truehome), solicitor, and a BER certificate to advertise. See the selling-your-home guide. - Buying: stamp duty, solicitor, valuation and survey. See the buying-costs guide.
Even after fees, downsizing typically releases substantial equity, because you are moving to a cheaper home, but go in with the net figure, not just the headline price difference.
Getting the timing right
The trickiest part is lining up the sale and the purchase: - Sell first, then buy: you know exactly how much you have, and you are a strong, chain-free buyer. The risk is needing somewhere to live in the gap, sometimes a short-term rental or staying with family. - Buy first, then sell: you avoid moving twice, but you may need bridging finance to cover the overlap, which is short-term and can be expensive. Weigh it carefully.
Many downsizers sell first for certainty, then move quickly on the purchase.
A few practical points
- Plan for life later on. If nursing-home care could be a factor down the line, the family home and any released cash interact with the Fair Deal scheme's financial assessment, see the Fair Deal guide before making big moves.
- Released equity is yours, but get advice on what to do with a large lump sum, especially around retirement.
- The non-financial side matters: staying near family, services and transport, and the effort of decluttering a long-held home, are real parts of the decision.
This guide is general information, not financial, legal or tax advice. Rules and rates change, so confirm the current position with a solicitor, Revenue, and a financial adviser before you act.
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