Capital Gains Tax FAQs
All forms of property are assets for CGT purposes whether situated in or outside the State. Examples of assets are:
- Currency, other than Irish currency
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.
Can you give a list setting out examples of some chargeable assets?
The following list is not exhaustive but all assets listed are chargeable to CGT:
- All forms of Land and property, wherever situate, including sites, be they developed or green field and with or without planning permission, houses, apartments, and commercial property.
- Shares in either Irish resident or non-resident companies.
- Governmental Stocks & Securities, other than Irish.
- Certain capital sums derived from assets.
- All forms of incorporeal property including options and the goodwill of a business.
- Trade assets.
Capital Gains Tax is a self- assessment tax. Regardless of whether you are registered for tax purposes you must calculate and pay your tax and file a return of gains and losses without being requested to do so by Revenue.
Firstly, you must calculate the gain or loss arising on the asset you sold. At its simplest this is the difference between the sale proceeds and the aggregate of the cost of the asset, acquisition and disposal costs and enhancement expenditure. Depending on when the expenditure was incurred an allowable adjustment for inflation (this is known as indexation – see Miscellaneous) may be made. In some instances, 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.
Unused capital losses arising in the current or earlier years may be offset against the gain. (Unused losses are used before the annual exemption of €1,270). The first €1,270 of an individual's annual gains is exempt. The balance is chargeable at 33%.
Special rules, including a rate of 40%, apply to disposals of certain foreign life assurance policies and offshore funds.
Additional information, including worked examples, computational sheets and inflation multipliers, is available in our CGT Booklet – Guide to Capital Gains Tax. (PDF, 1.33MB)
Am I entitled to any deductions in calculating my CGT liability?
Yes, you are entitled to deduct acquisition, enhancement and disposal costs. In other words, in calculating your CGT liability, you may deduct:
- The purchase price or market value (as appropriate) together with any incidental acquisition costs such as stamp duty, auctioneers fees, solicitors fees etc (in some circumstances you may be entitled to 'index' the acquisition and incidental costs – see Miscellaneous).
- Expenditure incurred for the purpose of enhancing the value of the asset, for example attic conversion, extension etc (in some circumstances you may be entitled to 'index' the enhancement costs).
- From the sale proceeds, incidental expenses of sale such as solicitors, advertising etc.
However, you should note that deductions may only be made in respect of expenditure wholly and exclusively incurred in connection with the acquisition, enhancement or disposal of the asset.
Main Exemptions & Reliefs
The following are of some of the main exemptions and reliefs. Additional information on these and others is available in our CGT Booklet – Guide to Capital Gains Tax.
- Private Residence
Page 15, of CGT
Guide (PDF, 1.33MKB), point 5.
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 (see Disposal of Property).
- Transfer of a site from parent to child
Page 16 of CGT
Guide (PDF, 1.33MB), point 6.
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 market value of the site must not exceed €500,000 (€254,000 for disposals prior to 5 December 2007). 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.
- Retirement Relief
Page 16 of CGT
Guide (PDF, 1.33MKB), point 7.
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 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.
CGT Payments & Returns
For 2009 and subsequent years the tax year is 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 January in the following tax year.
For years 2003 to 2008 inclusive the tax year was divided into two periods for CGT payment purposes:
- 'initial period' - 1 January to 30 September, both inclusive: due date for payment of CGT - 31 October in the same year
- 'later period' - 1 October to 31 December, both inclusive: due date for payment of CGT - 31 January in the following year
How do I pay my tax?
Having calculated the tax due you should send a cheque for that amount to the Collector General's office in Limerick. The payment should be accompanied by a CGT payslip which is a short form providing relevant details in respect of the payment.
As noted above there are two different disposal periods for CGT, this will determine the date payment is due and also which CGT payslip is required. Payslip A is for disposals in the first nine months of the year, payslip B is for the remainder of the year.
CGT payslips, which include the full address for the Collector General, can be downloaded from the Revenue website Capital Gains Tax Forms page or obtained by calling LoCall 1890 306 706.
Interest may be charged on late payments.
What information or returns should I send to Revenue about CGT disposals?
Irrespective of whether you have submitted a payment, or whether the gain is relieved from tax or a loss arises on the disposal, you must submit a tax return to Revenue in respect of any disposals. Generally the tax return is due by 31st October in the year following the calendar year in which the disposal was made.
If you are not required to submit an annual tax return you should complete Form CG1.
If you are required to submit a tax return each year you should include details relating to CGT in the appropriate portion of the return.
The return should be completed fully and accurately in respect of the disposal of assets. It is not necessary to include any additional information with the return, although any relevant documentation should be retained for future reference.
Penalties and surcharges may apply for incorrect or late returns.
Disposal of Property
In most instances you will not be liable to CGT on the disposal of your sole or main residence. A person's sole or main residence is also known as that person’s principal private residence. (More information on exemptions including principal private residence relief is shown under Main Exemptions and Reliefs)
What happens if I dispose of an Investment property?
You will be liable to CGT on any gain you make. (In the first place, you should realise that 'disposal' includes not alone an outright sale but also a gift. In circumstances where the disposal proceeds are less than market value, the market value is used to calculate any gain arising). The gain you make (ignoring indexation and purchase and sale costs) is simply the difference between the purchase price and the sale price.
I have an investment property and intend gifting it to my children, is this gift liable to CGT?
As set out in the question above gifts do indeed attract CGT. The market value at the date of the gift is substituted and CGT is then calculated in the normal manner.
If I make a gift of property and have to pay CGT on the disposal, does the beneficiary of the gift have to pay CAT on the acquisition?
Yes, the beneficiary may also be liable to Capital Acquisitions Tax on the acquisition. The CAT due will be assessed on the market value at the date of the gift. However, there are exemptions based on the relationship between the disponer and the beneficiary, for example, in 2007, a gift from a parent to a son or daughter is exempt once the valuation (of all gifts or inheritances within the same group or class since 1 December 1991) is €496,824 or less. A credit for any CGT payable on the same event that gives rise to the CAT charge is available for offset against the CAT arising.
If I sell part of my garden to a builder, who builds a house on it, am I liable to pay capital gains tax?
Yes. Normally when an individual disposes of his/her principal private residence and a garden or grounds of up to one acre (excluding the site of the house), then any gain on such a disposal is exempt from capital gains tax. However, where a dwelling house or garden/part of a garden, is sold for greater than its current use value, then this constitutes the sale of development land and principal private residence relief will apply only to the current use value. In general terms the difference between the consideration and the current use value is liable to capital gains tax. Development Land rules do not apply to disposals where the total consideration from such disposals does not exceed €19,050.
An individual disposes of part of his garden for €40,000. The current use value of the site is €2,000. The entire property originally cost €100,000. The market value of the property after the sale of the site is €360,000.
Step 1. Calculate the gain arising using the part disposal rules and ignoring any development land implications -
Proceeds are equal to €40,000.
Original Cost of €100,000 x [€40,000 / ( €360,000 + €40,000)] = €10,000
Index of (say) 1.5 i.e. €10,000 x 1.5 = €15,000
Gain is equal to €25,000.
Step 2: Calculate a notional gain, as if the site was sold for current use value. This is the principal residence relief -
Proceeds are equal to €2,000.
Original Cost of €100,000 x [€2,000 / ( €360,000 + €2,000)] = €552
Index of (say) 1.5 i.e. €552 x 1.5 = €828
Principal Private Residence Relief is equal to €1,172.
Deduct the Principal Private Residence Relief of €1,172 from the Gain of €25,000. The Chargeable Gain is equal to €23,828
On a subsequent disposal of the remaining property, the base cost of the land disposed of, will be the original cost less the base cost allocated to this disposal. i.e. €100,000 - €10,000 = €90,000
If I sell all or part of land owned by me under a Compulsory Purchase Order (C.P.O.), am I liable to pay capital gains tax on the disposal?
Yes, gains arising on the disposal of land by C.P.O. are chargeable to capital gains tax. In some circumstances you may be entitled to retirement relief (see Main Exemptions and Reliefs and Miscellaneous).
Transfers of Assets to Spouse or Civil Partner
If I transfer an asset to my spouse or civil partner do I have to pay CGT?
No, when the asset is transferred it is treated as if no gain/no loss occurred on the transfer; the benefiting spouse or civil partner inherits the base cost and period of ownership from the spouse or civil partner making the disposal. In the event that the benefiting spouse or civil partner subsequently disposes of the asset the original base cost and period of ownership is used to calculate any gain arising. See also the question below. (Transfers between spouses or civil partners are taxable, if the benefiting spouse or civil partner is non-resident in the year the transfer takes place.)
If I transfer an asset to my spouse or civil partner as part of a separation agreement or as part of a divorce settlement do I have to pay CGT?
No, the same reply as above applies. (Transfers between spouses or civil partners are taxable, if the benefiting spouse or civil partner is non-resident in the year the transfer takes place.)
However, it is very important to remember that any such transfer occurring AFTER and in certain circumstances BEFORE a formal separation or divorce is in place attract CGT in the normal manner.
What happens when I sell foreign assets?
If you are resident or ordinarily resident, and domiciled in the State you are liable to CGT on worldwide gains (See Introduction to CGT). Therefore, if you dispose of a foreign asset, for example a property in another country or shares in a foreign company, Irish CGT will apply. Where foreign capital gains tax is paid a credit may be available against your Irish CGT for some, or all, of that amount. Foreign CGT, which can’t be taken into account for credit purposes, is deducted from the sale proceeds in calculating the gain.
What indexation multiplier applies if I dispose of any assets?
A table of multipliers for the years ended 5 April 1996 to 31 December 2004 et seq is included in Leaflets and Guides - CGT- Capital Gains Tax Multipliers (PDF, 39KB)
How are the dates of disposal and acquisition for CGT purposes determined?
The main rules for determining the time of disposal and acquisition for CGT purposes are as follows:
- For disposals under an unconditional contract the time of disposal and acquisition is the date the contract is made, not the completion date.
- Where the contract is subject to a condition, the time of disposal and acquisition is the date the condition is satisfied, not the completion date. A contract is conditional if a condition must be satisfied before an obligation to perform the contract arises. For example, where the acquisition of land is subject to the purchaser obtaining planning permission, the time of disposal and acquisition is the date the permission is obtained.
- On a compulsory acquisition of land by an authority possessing the relevant powers, the time of disposal is either the date the compensation is agreed or the time of entry by the authority on the land, whichever is the earlier. (In certain circumstances, where the disposal under a compulsory purchase order is for road-building or widening purposes, the resultant CGT liability will not arise until the year of assessment in which the compensation is received).