Tony McLoughlin (Sligo-Leitrim, Fine Gael)
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123. To ask the Minister for Finance if consideration will be given in the Finance Bill 2017 to enable the capital gains tax of 33% to be lowered for legal separation in cases in which the sale of a divorcing couple's shared land holding will have to be used to provide new accommodation for a family member with a disability; and if he will make a statement on the matter. [37237/17]

Paschal Donohoe (Dublin Central, Fine Gael)
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I am advised by Revenue that a capital gains tax (CGT) relief applies in respect of a gain made by a couple who are legally separating on the disposal of their family home together with land occupied as its gardens or grounds up to an area (exclusive of the site of the residence) of one acre.  For full relief to apply, the house must have been occupied by the individuals as their family home (principal private residence) throughout the period during which they owned the property.  Where the house was not so occupied during the whole period of ownership, only the proportion of the gain applicable to the period of occupation is exempt from CGT.  However, the exemption would continue to apply in circumstances where, after the legal separation, the house is occupied by one of the parties as his or her principal private residence.  In any event, the last 12 months of the period of ownership is treated as a period of occupation for the purposes of the relief. 

Relief is also available in respect of a gain arising on the disposal of a house or part of a house which, during the period of ownership, was the sole residence of a dependent relative.  A dependent relative means a relative of the individual or of his/her spouse or civil partner who is incapacitated by old age or infirmity from maintaining himself or herself.  For the relief to apply, the house must have been provided rent-free and without any other consideration for the dependent relative.  No more than one dwelling house (or part of a dwelling house) may qualify for relief as being the residence of a dependent relative of the claimant at any one time.

Furthermore, there is an exemption from CGT where a parent transfers land to his/her child to enable that child to build a principal private residence for himself/herself.  The relief is available if the child builds the house on the land transferred to him or her; it is not available if the parent builds the house and then transfers the house to the child.  The relief only applies to sites limited to one acre in addition to the house site itself and with a market value of up to €500,000.  Only one CGT-exempt disposal of land is allowed to each “child”.  If the child subsequently disposes of the land (other than to his/her spouse or civil partner) and the land does not contain a dwelling house which was constructed by the child since the land was acquired and which has been “occupied” by the child as his/her only or main residence for a period of at least three years, then the chargeable gain which would have accrued to the parent shall accrue to the child in addition to any gain arising to the child on the disposal.  However, a further disposal of land to that “child” is entitled to be exempted from CGT if the conditions are met.

Gains arising in respect of other jointly owned property such as, for example, a property which was held by a divorcing or separating couple as an investment are liable to CGT at the rate of 33%. The first €1,270 of a gain accruing to an individual in a tax year is exempt from CGT.

In the absence of more specific information, and on the basis that you have a particular case in mind when asking this question, I hope this response provides the required clarity. If, however, a question still remains for you, you might provide more information about the issue in a written representation, which will allow my officials to provide me with a more targeted answer for you.