What is Capital Gains tax?
Capital gains is a tax you may have to pay if you sell or ‘dispose’ of an asset such as a property, land or shares and you make a gain or a profit.
How much CGT should I pay?
The CGT rate is 33% on disposals made after 5th December 2012.
When do I have to pay it?
When you pay Capital Gains tax will depend on when you disposed of your asset. There are two payment deadlines. CGT on gains made between 1st January and 30th November 2019 should be paid by the 15th December 2019 while CGT on gains in December is due to be paid by the 31st January 2020. If you miss these deadlines you will be liable to interest and late payment penalties.
Where should you pay CGT?
If you normally reside in Ireland you are liable to pay CGT on worldwide gains. So if for example you have a gain on a property in Spain you must file a return in Ireland detailing the gain however you will receive a credit for any CGT already paid in Spain.
How can I reduce my CGT liability?
There are a number of reliefs that may be available to either reduce or eliminate the CGT on a gain. The most common of these reliefs are:
- The first €1,270 of a gain in a year is exempt from tax. Current year losses in a year can be used to offset a gain and can be carried forward. So if you disposed of more than one asset in a year and made a gain on one but a loss on another you can offset the two against each other. Losses cannot be carried back to a previous year.
- If you made a loss on a disposal in a previous year you may be able to claim relief against any current gains. So for example if you sold bank shares in 2008 and made a loss and you sell a rental property this year you can offset the amount of the loss in 2008 against the gain in 2019. You can carry forward losses indefinitely.
- Transfers between married couples, or partners in a registered Civil Partnership, are exempt from CGT.
- If you purchased an asset prior to 2004 you can get relief for inflation on the asset up until 2004. The relevant inflation factor is available from Revenue’s indexation table.
- Retirement Relief – the sale of business assets may qualify for Retirement Relief where the individual is aged over 55 years of age. There are a number of conditions that must be satisfied in order for this relief to apply.
Making a return
In addition to making a payment you must also ensure to file a CGT return with the Revenue Commissioners. For disposals of assets in 2019 a tax return must be filed with details of the disposal by 31 October 2020. TaxAssist Accountants can assist you with the preparation of your return, contact us today.
By Alison McGinley
Last updated November 2019