Written answers

Wednesday, 1 December 2021

Photo of Ivana BacikIvana Bacik (Dublin Bay South, Labour)
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78. To ask the Minister for Finance if capital gains tax applies on the sale of a family home in Ireland in circumstances (details supplied); and if he will make a statement on the matter. [59408/21]

Photo of Paschal DonohoePaschal Donohoe (Dublin Central, Fine Gael)
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I am advised by the Revenue Commissioners that, in general, capital gains tax (CGT) is chargeable on a gain arising on the disposal of an asset at the rate of 33%. The first €1,270 of chargeable gains of an individual in any year are exempt from CGT.

Section 604 of the Taxes Consolidation Act, 1997 provides relief from CGT on the disposal of one’s principal private residence, being a dwelling house together with land occupied as its gardens or grounds up to an area (exclusive of the site of the residence) of one acre. If a property was occupied by an individual as his or her principal private residence for all or part of his or her period of ownership, then full or partial relief from CGT will be available where a chargeable gain arises on the disposal of that property. The last 12 months of ownership of the property by the individual is treated as a period of occupation for the purpose of this relief. For the purpose of the relief, an individual cannot have more than one principal private residence at any one time.

If an individual occupied the property as his or her principal private residence throughout their period of ownership, then full relief is available in respect of any gain which arises on the disposal of the property. 

Where, as would be the case in the circumstances outlined, the property has been occupied by the individual as his or her principal private residence for part of the period of ownership, only a proportion of the gain on the disposal is exempt. This proportion is the same proportion that the length of the period of owner-occupation (inclusive of the last 12 months of ownership) bears to the length of the period of ownership. The balance of the gain is chargeable to CGT in the normal manner.

The following example illustrates the application of partial principal private residence relief. An individual purchases a house in 2021.  The house remains unoccupied until 2022 when the individual moves into the house and it becomes their principal private residence and remains so until the house is sold in 2026.  For approximately 4 out of the 5 years of ownership, the house was the individual’s principal private residence.  As such, approximately 4/5ths of the gain arising on the disposal of the house may be exempt from CGT, should all other conditions of the relief be met. The balance of the gain will be subject to CGT in the normal manner.

Where the property was never occupied by the individual as his or her only or main residence at any time throughout the period of ownership, the relief will not be available and the entire gain arising on the disposal will be subject to CGT in the normal manner.

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