CGT is a tax on a capital gain (profit) arising from the disposal or deemed disposal of an asset.
In simple terms, you pay tax at 33% on the ‘chargeable gain’ which is the sales proceeds less what you paid for the asset.
What do you pay CGT on?
You must pay CGT on gains made from the sale, gift or exchange of assets such as:
land (including development land)
buildings (houses, apartments or commercial property)
shares in companies (Irish-resident or non-resident)
assets that have no physical form 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)
When and how do you file and pay CGT?
The dates you pay and file CGT are based on the date you sold, gifted or transferred an asset. Your payment for CGT is due before you file your return.
CGT on disposals made between 1 January – 30 November has to be paid by 15 December of the same year.
CGT on disposals made between 1 December – 31 December has to be paid by 31 January of the following year.
Your CGT return must be filed by 31 October of the next year.
Are there ways I can reduce my CGT liability?
Yes. Your CGT liability may be reduced by availing of an exemption, this means you do not pay any tax. You may also be entitled claim a relief, the use of a relief minimises your tax bill. And, you can also deduct allowable expenses such as legal fees and the cost of enhancement expenditure (money spent on improving the asset) from the chargeable gain, thus reducing your tax bill.
What gains are exempt from CGT?
You do not need to pay CGT on gains from:
Wins from betting, lottery, prize bonds, sweepstakes
Bonuses payable under the National Instalments Savings Scheme
Certain life assurance policies
Moveable property, where the gain does not exceed €2,540
Wasting chattels such as animals and motor cars
For every tax year, the first €1,270 of your gain or gains (after deducting losses) are exempt from CGT. This exemption to both resident and non-resident individuals. This is not transferrable between spouses.
Transfers between spouses or civil partners
A gain on an asset that is transferred between spouses or civil partners is normally exempt from CGT.
Transfers on death
When a person dies, the transfer of their assets to the beneficiaries does not give rise to a CGT liability.
Transfer of a site to a child
The transfer of a site to a child from a parent is exempt from CGT if the site is for the child to build their principal private residence on. This is subject to further conditions such as the size of the site and the value of the site.
What reliefs from CGT are available?
Where an individual over the age of 55 disposes of business or farming assets, or shares in a family company they may be able to claim Retirement Relief.
This means CGT will not be charged on disposals where certain conditions are met and the proceeds of the sale are below certain thresholds depending on the relationship between the two parties.
See information below for the lifetimelimits:
Age 55-66 – Disposal to Qualifying Child – No Limit Age Over 66 – Disposal to Qualifying Child – €3,000,000
Age 55-66 – Disposal to someone other than a Child – €750,000 Age Over 66 – Disposal to someone other than a Child – €500,000
Marginal relief may apply in some cases where the sales proceeds exceeds these amounts.
The key points/conditions of the relief are:
You do not have to actually retire to claim the relief
You must be disposing of ‘qualifying business assets’
You must have owned the assets/business for 10 years
You must have reached your 55th birthday
If shares, they must be shares in a family company
There will be a clawback of the relief if the business, assets or shares are disposed of within a certain timeframe.
Provides a 10% CGT rate instead of the standard 33% rate for disposals of business assets, owned for not less than 3 years, up to a lifetime limit of €1m. Subject to certain conditions.
Transfer of a Business to a Company
Where a business transfers all of it non cash assets to a company as a going concern in exchange for shares in that company, the base cost of the shares is reduced to match the cost of the assets results in a nil CGT liability. Subject to certain conditions.
Principal Private Residence Relief
Provides relief from CGT on the sale of you principal private residence i.e. primary home. Subject to conditions such as occupancy in the home for the period of ownership.
Farm Restructuring Relief
CGT relief applies if the first transaction in the restructuring (e.g. purchase, exchange or sale of land) takes place on or before 31st December 2022.
The above information may be helpful to you, but it is only intended to provide you with general outline of Capital Gains Tax. Also please bear in mind that the list of exemptions and reliefs is not exhaustive it should not be used to determine ones tax liability. There are a wide variety of factors not mentioned, that need to be taken into account when ascertaining ones tax obligations. Therefore we always recommend seeking personalised tax advice regarding the disposal of assets.
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