Capital Gains Tax

Rate of Capital Gains Tax

The rate of capital gains tax was increased to 25% in respect of disposals made from midnight on 7th April 2009.

Brief Overview

Capital Gains Tax (CGT) is a tax on gains arising on the disposal of assets. A disposal means a transfer of ownership in an asset whether by means of sale, gift, exchange or otherwise and includes a part disposal of an asset.

2. What are assets for Capital Gains Tax purposes?

All forms of property are assets for CGT purposes whether situated in or outside the State. Examples of assets are:

• Land
• Shares
• Goodwill
• Currency, other than Irish currency

3. Do all disposals of assets give rise to CGT liability?

No, not all disposals (of assets) give rise to a charge of CGT. For example, any gains arising in the following circumstances are not regarded as giving rise to chargeable gains and hence are not liable to CGT

• Gains from the disposal of Governmental Stocks and Securities.
• Gains from the disposal of tangible movable property, where the amount or value of the consideration does not exceed €2,540.
• Gains from the disposal of wasting assets, i.e. assets with a predictable life of less than 50 years, for example, a private motorcar, livestock etc.
• Gains from the disposal of your principal private residence.
• Prize Bond, Lottery and Gaming winnings.

For 2009 and subsequent years the tax year was divided into a revised set of two periods for CGT payment purposes, as follows:

• 'initial period' - 1 January to 30 November, both inclusive.
• 'later period' - 1 December - 31 December, both inclusive.

The due dates for payment of CGT are now as follows:

• Disposals in the initial period: Tax due by 15 December in the same tax year.
• Disposals in the later period: Tax due by 31 October in the following tax year.

The main exemptions and reliefs from CGT are:

1. Principle Private Residence Relief
   Gains made on the disposal of your home together with its gardens or grounds up to an area (exclusive of the site of the residence) of one acre may be exempt. For full relief to apply, you must have occupied the home as your principal private residence throughout your period of ownership or to within 12 months of the date of disposal. Relief may be restricted where the home was not your main residence throughout the period of ownership (other than the final 12 months), where any part of it was used exclusively for the purposes of a trade, business or profession or where it is sold as development land, for example part of the garden.

2. Transfer of a site from parent to child relief
   There is an exemption from CGT if you transfer a site to your child (including certain foster children) where the transfer takes place after 6 December 2000 and is to enable the child construct a principal private residence on the site. The site must not be valued at more than €254,000. For transfers on or after 1 February 2007 the area of the site (exclusive of the area on which the house is to be built) must not exceed 0.4047 hectare, ie 1 acre. The relief is clawed back and charged on the child in certain circumstances.

3. Retirement Relief
   This relief applies where you dispose of certain "qualifying assets". These include assets used for the purpose of a trade, profession or farming and shares in certain family trading companies. You must be at least 55 years of age at the time of the disposal and satisfy a number of other conditions. It is not necessary that you retire to claim the relief

Should you require any further information, please contact Susan Lennon. 

Email: slennon@annebrady.ie