There are a number of reliefs available relating to CGT in certain circumstances. This will help reduce the amount of tax due on the disposal. We've listed them below.
Also known as ‘inflation relief’, this may be claimed if you owned the asset before 2003 and the market value of the asset at the time you became the owner is increased based on inflation calculated by the Central Statistics Office.
For example, if land is being used for development, relief applies to the value that the land would have had at the date you became the owner when it wasn’t development land.
Indexation relief was abolished for the tax year 2003 and any year thereafter, however you can get indexation relief up to and including 2002. If you acquired the property in 2003 or any subsequent year, then you can't avail of this relief.
If you dispose of land to make your farm more efficient then you may be able to claim this relief. Teagasc (the Agriculture and Food Development Authority) must issue a certificate in order for you to claim this relief.
This certificate must state that you carried out the transaction for farm restructuring purposes.
- The first sale or purchase must be from 1 January 2013-31 December 2022.
- The next sale or purchase must be within 24 months of the first sale or purchase.
- You may also be able to claim relief where you exchanged land with another person.
● Land you purchased
● Land you received in exchange for your land
This relief is for you if you made gains from the disposal of business assets. There is a lifetime limit of €1 million for this relief on gains made on or after 1 January 2016. This relief replaced a relief that applied for the years 2014 and 2015.
With this relief, you must pay CGT at the rate of 10% on gains from the disposal of business assets. This is reduced from the normal rate of 33%. Up to 31 December 2016, gains from such disposals are charged at 20%.
You must pay CGT if you receive compensation or insurance money, however if you use the money to replace an asset you may defer the CGT.
The compensation you get reduces the cost of the asset. It can also reduce the replacement cost of the asset if you have lost it or it was destroyed.
Matthew receives compensation from his insurance for damage resulting for a recent flood. If he uses the money to repair damage to the property he can defer the CGT payment until the property is sold.
If you dispose of land between 7 December 2011 and 31 December 2014 then you may be due relief on CGT. You must have owned the land or buildings for at least 7 consecutive years.
You can reduce the gain by the number of years you owned the property divided by 7 years, so if you owned land or buildings for 10 years, the gain will be reduced by seven tenths.
You can claim this relief in respect of land or buildings in this country or in any European Economic Area (EEA) state.
If you’re 55 or older, you may be able to claim relief on disposing any part of your business or farming assets. Although this is called Retirement Relief, you don’t need to retire to avail of it.
● You’re unable to continue farming due to ill health
● You reach the age of 55 within 12 months of the disposal
For disposals made up to and including 31 December 2013, you can claim full relief if the market value at the time of disposal doesn’t exceed €750,000.
● The disposal takes place on or after 1 January 2014, and
● you’re 66 or older
If the market value is more than the above threshold, marginal relief may apply which limits the CGT to half the difference between the market value and the threshold.
The threshold of €750,000 (€500,000 after 1 January 2014 for persons aged 66 or older) is a lifetime limit. If you exceed this threshold, relief will be withdrawn on earlier disposals.
If dispose all or part of your business or farming assets to your child, you may be entitled to relief from CGT.
● A child of your deceased child
● A niece or nephew who worked full-time in the business or farm for at least 5 years
● A foster child whom you maintained for at least 5 years
● Up to 31 December 2013, you may claim full relief if you’re 55 or older
● From 1 January 2014, you may claim full relief if you’re between 55 and 65
● If you’re 66 or older the relief is restricted to €3 million
If your child disposes of the asset within 6 years, relief will be withdrawn and your child must pay CGT on the original disposal by you, in addition to the CGT on their own disposal.
● You sell an asset on or after 25 March 2002 for over €500,000
● You sell a house or apartment on or after 1 January 2016 for over €1 million.
The buyer is obliged to withhold 15% of the purchase price from you if you don’t have a CG50A Form. The buyer will then give you a Form CG50B. This will allow you to reclaim the amount withheld by them from Revenue at a later date.
● Be resident in the country
● Have paid CGT on the disposal, if it’s due
● A current Tax Clearance Certificate
● A certificate of authorisation (C2 cert)
● A Tax Clearance Certificate issued specifically for the purpose of Section 980, Taxes Consolidation Act 1997
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