Written answers

Wednesday, 30 April 2014

Photo of Seán FlemingSeán Fleming (Laois-Offaly, Fianna Fail)
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69. To ask the Minister for Finance the current situation regarding capital gains tax; if individuals who sell some land and use the proceeds to buy other land, which they are not directly involved in farming themselves, are subject to capital gains tax; if any roll-over relief is allowed in this situation; if the deductions can be made from the sale price to calculate the capital gains tax and if the original sale price and improvement works carried out on these lands may be deducted as a cost in arriving at the gain; and if he will make a statement on the matter. [18967/14]

Photo of Michael NoonanMichael Noonan (Limerick City, Fine Gael)
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I am informed by the Revenue Commissioners that land is a chargeable asset for capital gains tax purposes. Accordingly any chargeable gain made on a disposal of land is subject to capital gains tax. Roll-over relief has not been available in respect of any disposals of chargeable assets made on or after 4 December 2002.

A chargeable gain is the difference between the sale price (net of incidental costs  incurred wholly and exclusively for the purposes of the sale e.g., solicitors costs, auctioneers costs, advertising costs) and the purchase price (including the incidental costs  incurred wholly and exclusively for the purposes of the acquisition e.g. solicitor's  fees, auctioneer's fees, stamp duty).  If the land was owned prior to 6 April 1974, the market value of the land as at 6 April 1974 is substituted for the purchase price and incidental costs of acquisition.   Any costs of a capital nature incurred in enhancing the land are allowable as a deduction in computing a chargeable gain. Where the land was owned at 6 April 1974 only  costs of a capital nature incurred since that date in enhancing the land are allowable as a deduction ( as any market value figure at 6 April 1974 would reflect any such costs incurred before that date).

If the land was purchased on or before 31 December 2002, the purchase price and incidental costs of acquisition are adjusted by an indexation factor to take account of the impact of inflation from the year  of acquisition (or 6 April 1974, where the asset was acquired prior to that date)  to 31 December 2002. In the case of development land, indexation relief is confined to the current use value of the land.

Retirement relief or farm restructuring relief are available to farmers who satisfy the requirements governing these reliefs. However I understand that the individual in respect of whom this question is asked is not a farmer and would not therefore qualify for these particular reliefs.

The first €1,270 of any capital gain made by an individual in any year is not chargeable to capital gains tax. The current rate of capital gains tax on any chargeable gain is 33%.

Detailed information on all aspects of capital gains tax (including allowable deductions, indexation relief factors and the method of calculation of a capital gain), is available in Revenue's Guide to Capital Gains Tax, leaflet CGT1, on the Revenue website, .

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