Michael Moynihan (Cork North West, Fianna Fail)
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526. To ask the Minister for Finance if capital gains tax is applicable to property which is sold under a compulsory purchase order; and if he will make a statement on the matter. [20718/22]

Paschal Donohoe (Dublin Central, Fine Gael)
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The acquisition of a property by way of compulsory purchase order (CPO) is the disposal of an asset for the purposes of Capital Gains Tax (CGT).  Any chargeable gain arising on such a disposal is subject to CGT at a rate of 33%. The first €1,270 of total chargeable gains in respect of an individual in any year of assessment is exempt from CGT.

It is the amount of the chargeable gain (if any) arising on the disposal of an asset which is subject to CGT.  In these circumstances, the chargeable gain is calculated as the difference between the proceeds received on the disposal of the property by way of CPO and the price paid for the property (or in certain circumstances, the market value at the time of acquisition). A deduction may be claimed for costs incurred in acquiring and disposing of the property such as for example stamp duty, legal fees, auctioneers’ fees.

The disposal for CGT purposes will occur by reference to the date on which the compensation proceeds are received and any CGT liability arising will be payable by reference to that date.

If, however, the property acquired by way of CPO was occupied by the owner as his or her principal private residence, then full or partial relief from CGT will be available where a chargeable gain arises on the disposal of that property. 

Section 604 of the Taxes Consolidation Act 1997 provides relief from CGT on the disposal of one’s principal private residence. 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 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. 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.

I am advised by Revenue that the facts and circumstances of each disposal will determine the amount of any CGT due as a result of a property being compulsorily acquired.