Tax on Capital Gains
At its simplest, Capital Gains Tax in Ireland is a tax on gains that arises from the disposal of capital assets, for instance such as land, buildings and shares. A disposal means a transfer of ownership whether by means of a sale, gift, exchange or otherwise and includes a part disposal of an asset.
Who is liable to pay CGT?
A person who is resident or ordinarily resident in Ireland is subject to CGT on any gains arising from a disposal of capital assets. A summary of the residency position is outlined below. Here at MLMG we can assist in determining your residency status.
|Resident or Ordinarily Resident?||Domiciled?||Liable to Irish CGT on?|
|Yes||No||Irish gains and other gains to the extent that they are remitted to Ireland|
|No||Yes||Only on Irish specified assets|
|No||No||Only on Irish specified assets|
What is the rate of tax of Capital Gains Tax?
The rate of tax on chargeable gains is currently (May 2017) 33%.
How is the chargeable gain calculated?
Generally speaking it is calculated by deducting allowable expenditure from your proceeds.
What is considered allowable expenditure?
Certain costs incurred in respect of the asset are allowable such as:
- The purchase price of the asset together with any incidental costs such as stamp duty, auctioneer fees and solicitors’ fees – an adjustment for inflation can be applied to the cost of assets purchased before 31 December 2002.
- Expenditure enhancing the value of the asset. As noted an adjustment for inflation may be applied in respect of expenditure incurred before 31 December 2002.
- Incidental expenses related to the sales proceeds such as solicitors fees, advertising etc.
Are there any relief or exemptions available?
There are a number of exemptions/reliefs from CGT including the following:
- The first EUR1,270 of net gains in a tax year are exempt
- Gains from betting, lotteries, sweepstakes, bonuses payable under the National Instalments Savings Scheme and Prize Bond winnings.
- Gains on Government Stocks and other securities.
- Gains on the disposal of wasting chattels (such as animals, private motor cars).
- Gains on Life Assurance policies (unless purchased from another person or taken out with certain foreign insurers on or after 20 May 1993).
- Gains made by individuals on tangible moveable property (such as household furniture) where the consideration does not exceed €2,540.
- The disposal of a principal private residence*
- Transfer of a site to a child relief*
- Retirement relief *
- Entrepreneurs relief *
*These reliefs are subject to a number of conditions and here at MLMG we can confirm whether any such reliefs will apply.
Capital Gains Tax – how is it paid?
The due date for payment of CGT depends on the date you disposed of the asset. Disposals made from
- 01 January to 30 November – due date for payment is 15 December in the same year.
- 01 December to 31 December – due date for payment is 31 January of the following calendar year.
When must the tax return be made?
The due date for filing a return in respect of the disposal is 31 October in the year following the disposal. For example a tax return for a disposal in 2016 will be due by 31 October 2017. It is important to note the date for payment is different to the date the return is due. The type of return required will depend on your individual circumstances. Here, at MLMG, we can assist in calculating any tax payment due and advise on and complete the appropriate tax return for you.
At MLMG. our dedicated tax department, staffed by professional tax advisers, provide comprehensive personal and business tax compliance and planning services to clients on both sides of the border.
Contact us here or call us on 07493 21420 today for Independent, expert advice.
You may also be interested in our other blog post 3 things you should know about inheritance tax