Capital Gains is a tax on the gains when you dispose of an ‘asset’ such as land or property. When you own or part own an asset, you may sell, gift or exchange it and this is called a ‘disposal’.
| Land |
| Buildings (houses, apartments, commercial property) |
| Company shares (resident or non-resident) |
| Assets such as goodwill, patents, and copyright |
| Currency (other than Irish currency) |
| Assets of a trade |
|
Foreign life insurance policies and offshore funds
|
| Capital payments (in certain situations) |
| You may also have to pay CGT on gains for other types of assets such as jewellery, antiques, paintings, etc. |
| Cryptocurrency |
Some gains are not subject to CGT and some are exempt only in certain circumstances.
Up to a certain amount is your Personal exemption |
You don’t need to pay CGT on the first €1,270 of your gain for each year |
Disposing of your Principal Private Residence |
You also don’t need to pay tax on the disposal of a property which you occupied or was occupied by a dependent relative as a sole or main residence. (Restrictions may apply where the property was not fully occupied as a main residence throughout ownership or where the sale price reflects development value). If you let out your home at any point while you owned it, you can claim a partial exemption. The Rent-a-Room scheme doesn’t affect your claim for full exemption. You may sell your home and surrounding land of up to 1 acre for its development value. In this case, the exemption will apply to the value of the house or land without its development value. You may have to pay CGT on the value of the house or land over that amount. |
Lottery wins |
Gains from betting, lotteries, sweepstakes, and bonuses payable under the National Instalments Savings Scheme and Prize Bond winnings aren’t liable to CGT |
Stocks and securities |
You don’t need to pay CGT on gains on Government Stocks and other securities (e.g. securities issued by certain semi-state bodies) |
Disposal of wasting chattels (e.g. animals, private motor cars, etc) |
A wasting chattel is a tangible moveable property that’s a ‘wasting asset’. Examples of wasting assets include bloodstock, livestock, motor cars and household furniture, and appliances (besides antiques). The exemption doesn’t apply to wasting chattels for business purposes to the extent that the expenditure on the assets qualified for capital allowances. Neither does the exemption apply to commodities. |
Life Assurance policies |
Unless purchased from another person or taken out with certain foreign insurers on or after 20 May 1993.
|
Tangible movable property |
E.g. household furniture, where the consideration doesn't exceed €2,540. |
If you transfer land to your child to build a house which will be used as your child’s only or main residence, you won’t have to pay CGT on the transfer. A transfer in this case includes a joint transfer by you/and your spouse/civil partner to your child. This also includes a child whom you fostered.
This must have been for at least 5 years before the child reached the age of 18. You must support the claim that you fostered the child by evidence from more than one person.
- Be 1 acre or less
- Have a value of €500,000 or less
1. Without having built a house on that land or
2. If they built a house on the land, having not occupied that house as their only or main residence (this must be for a period of at least 3 years).
This rule doesn’t apply if the child disposes of the land to their spouse or civil partner.
This type of tax is a self-assessment tax and you must calculate the gain or loss arising on the asset you sold. Irrespective of whether a gain or loss was realised, you must report the gain or loss on a tax return.
Just remember that you don’t need to pay tax on the first €1,270 of your gain.
The standard rate of CGT is 33% for disposals made on or after 5 December 2012.
| Date | CGT |
| 6 December 2012 – present | 33% |
| 7 December 2011 – 5 December 2012 | 30% |
| 8 April 2009 – 6 December 2011 | 25% |
| 15 October 2008 – 7 April 2009 | 22% |
| Up to and including 14 October 2008 | 20% |
● Gains from foreign life policies and foreign investment products are charged at 40%
● Gains from venture capital funds are charged at 12.5% (individuals and partnerships) and 15% (companies)
● Windfall gains are charged at 15%
The gain/profit is usually calculated by the difference between the price you paid for the asset and price you sold it for.
In some cases, for example where an asset is disposed of by gift or acquired on the death of the previous owner, the market value is substituted for the sale proceeds and actual cost.
- Cost of acquisition
- Inflation index if the asset/property was purchased before 2003
- Expenditures incurred for the purpose of enhancing the value.
- Incidental expenses incurred on acquisition or disposal, such as solicitor's fees, advertising costs, auctioneer's fees, accounting fees, etc.
Special rules apply if you calculate CGT on gains from the disposal of shares.
A chargeable gain on the disposal of company shares is arrived at by deducting the cost of the shares (adjusted for inflation, as appropriate) from the net consideration received for the disposal of the shares.
The calculation is relatively straightforward where a person acquires one block of shares and at a later date, without there having been any changes in the number or type etc. of the shares held, sells all or part of that holding.
Often there will be increases in the shareholding, either because a person purchases additional shares of the same type or they receive additional shares under bonus or rights issues. There are special capital gains tax rules for these situations.
If you need more information, you can contact our advisors at Taxback.com about your particular situation.
Comments (0 comments)