Capital Gains Tax

Capital Gains Tax (CGT) is chargeable on gains arising on the disposal of assets by individuals and companies. Any form of property (other than Irish currency) including an interest in property (as, for example, a lease) is an asset for CGT purposes.

 

  • Who Is Liable to pay Capital Gains Tax
  • If you are resident or ordinarily resident, and domiciled in the State you are liable on worldwide gains.
  • If you are neither resident nor ordinarily resident you are liable on gains on the disposal of specified assets.
  • If you are resident or ordinarily resident in the State but not domiciled you are liable on gains from the disposal of Irish situated assets in full and on gains from the disposal of foreign assets to the extent that the gains are remitted into the State.

 

Rate of Tax

The standard rate is 25% in respect of disposals made from midnight on 7th April 2009. Previous rates were 22% on disposals from 14 October 2008 and 20% in respect of disposals made prior to that date. The first €1,270 of an individual’s annual chargeable gains, net of allowable losses, are exempt.

 

Main Exemptions & Reliefs

  • The first €1,270 of net gains, i.e., - gains after allowable prior year and current year capital losses, by an individual in a tax year is exempt. In the case of married couples this exemption is available to each spouse but is not transferable.
  • A gain on the disposal of a principal private residence, including grounds of up to one acre is exempt, provided the house had been occupied by the individual as his/her only or main residence during the individual's period of ownership.  This exemption is restricted where the house was part let or part used for business or the individual did not reside there for long periods (with the exception of the Rent-a-Room Scheme introduced in Finance Act 2001) or where the house or gardens are sold for development purposes.
  • A gain on the disposal of a principal private residence may also be exempt where the house had been used as the sole residence of a Dependent Relative
  • Retirement 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 at 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.
  • Transfers of assets to a spouse are exempt from CGT.  When the asset is transferred it is treated as if no gain/no loss occurred on the transfer; the benefiting spouse inherits the base cost and period of ownership from the spouse making the disposal. In the event that the benefiting spouse subsequently disposes of the asset the original base cost and period of ownership is used to calculate any gain arising.

 

Assets that do not give rise to CGT

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