Capital Gains Tax (CGT) on the sale, gift or exchange of an asset
How to calculate CGT
The rate of CGT that you pay depends on the date of disposal.
You do not pay tax on the first €1,270 of your gain. After this amount you pay tax as follows:
|Date of disposal||CGT %|
|6 December 2012 – present
|7 December 2011 – 5 December 2012
|8 April 2009 – 6 December 2011
|15 October 2008 – 7 April 2009
|Up to and including 14 October 2008
There are other rates for specific types of gains:
- 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%.
What are the rules for calculating CGT?
When calculating your CGT liability, you may deduct the following items:
- the cost of purchasing the asset
- any money spent by you which adds value to the asset (known as 'enhancement expenditure')
- costs (for example, fees paid by you to a solicitor or auctioneer) when you acquired and disposed of the asset.
You may adjust the purchase price and enhancement expenditure for inflation. This is called indexation relief.
If you gift an asset to someone instead of selling it, you still pay CGT. You should use the market value of the property at the date the gift was given to calculate your CGT liability.
If you are resident, or ordinarily resident, and domiciled in Ireland, you have to pay Irish CGT on foreign property. If you have paid CGT in a foreign country, you may be able to offset this against your Irish CGT.
Special rules for calculating CGT
Special rules apply if you are calculating CGT on gains made from disposal of shares. You can find details of these rules below.
First In, First Out (FIFO)
If you hold shares of the same class (for example, ordinary shares) which you acquired at different dates, the oldest shares are treated as being sold first.
This rule does not apply to shares sold within four weeks, which you may make a loss on. You will not be able to offset this loss against a gain made by you, however. You can only use the loss against a gain made when disposing of those specific shares.
Bonus or rights issues
You may receive additional shares from a bonus or rights issue. A bonus issue is where a company issues additional shares to a shareholder for no cost. A rights issue is where a company issues shares to a shareholder for a cost which is less than their market value. These shares are treated as being acquired by you at the same time as you acquired the original shares.
In the case of a bonus issue, the original cost is reduced. It is then spread between the original shares and the new shares.
Shares acquired under a rights issue are treated in the same way as shares acquired under a bonus issue. The only difference is that there is an allowance made for the amount paid to acquire the additional shares. This payment is treated as enhancement expenditure. When you dispose of the shares, part of the cost of the rights issue is allowed against those shares.
Shares of a different class
You may receive shares of a different class to the shares that you hold under a bonus or rights issue. An example is where you receive one new preference share for every two ordinary shares held by you. Where this happens, the treatment is broadly the same as outlined above. The only difference is that you spread the cost of the shares between the different classes.
The shares may be quoted on a stock exchange. If so, the quoted price is based on the price of the shares on the day after the bonus or rights issue. If the shares are not quoted on a stock exchange, base your calculations on the value of the shares at the date of disposal.
Next: CGT reliefs: Disposal of a business or farm