Indexation Relief (or inflation relief)

You can claim indexation relief 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 an inflation calculation by the Central Statistics Office (CSO). Indexation relief operates by adjusting the acquisition cost of a chargeable asset for inflation.

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 applies to all deductible expenditure from the tax year in which it is incurred to the earlier of:

• the tax year in which the asset is disposed of
  or
• 1 January 2003

Deductible expenditure includes:

• Cost of acquisition
• Incidental acquisition costs
• Enhancement expenditure

In respect of assets purchased prior to 6 April 1974, you will have to index the market value of that asset at 6 April 1974 and not the original cost of the asset.

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.