Ann Graves (Dublin Fingal East, Sinn Fein)
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695. To ask the Minister for Finance if he will address an issue (details supplied) in the forthcoming Budget; and if he will make a statement on the matter. [43114/25]

Paschal Donohoe (Dublin Central, Fine Gael)
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Capital gains tax (CGT) may arise in respect of chargeable gains accruing 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.

From the details supplied, I understand that following a separation, one spouse moved out of the family home, no longer occupying it as their only or main residence from that time on and, as part of a divorce settlement, the court ordered that the family home could not be sold for a number of years. The matter you have raised concerns the CGT consequences for the person who moved out of the family home when it is ultimately sold.

Any future disposal of the property will constitute a disposal of the former spouses’ respective interests in the property for CGT purposes, and a CGT liability may arise in respect of any gain which accrues to the former spouses on this disposal, subject to any reliefs which may be available to them, based on their individual circumstances at that time.

Section 604 of the Taxes Consolidation Act 1997 (TCA 1997) provides relief from CGT on the disposal of one’s principal private residence (PPR), being a dwelling house together with land occupied as its gardens or grounds up to an area (exclusive of the site of the dwelling house) of one acre. If a property was occupied by an individual as their PPR for all or part of their 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 such a property by the individual is treated as a period of occupation for the purpose of this relief. By way of example, if an individual both owned and occupied a residential property as their PPR for 10 years prior to disposal, no CGT will arise in respect of any chargeable gain which may accrue to that individual on foot of their disposal of same. However, if the individual only occupied the property as their PPR for 7 of the 10 years in which they owned the property, they will pay CGT in respect of 20% of the chargeable gain which may arise on foot of their disposal of same, as the portion of the gain which relates to the period in which the individual occupied, or is deemed to have occupied, the property as their PPR is fully relieved from CGT.

Section 1031 TCA 1997 provides that where a person who has obtained a decree of divorce under the Family Law (Divorce) Act 1996 disposes of an asset to his or her former spouse pursuant to a court order under that Act, a charge to CGT does not arise. However, my understanding is that, in this case, the family home is to be sold at a future date, and not that one spouse has been directed to dispose of their interest in the property to their former spouse at that time; as such, it appears that this provision is not applicable in these specific circumstances.

While it appears that the former spouse who no longer occupies the property may qualify for partial PPR relief on the disposal of the family home in the future, since I understand that they have occupied the property as their PPR for a portion of their period of ownership of same, it should be noted that the specific facts and circumstances at the time of disposal of the property in question will determine the application of any relief and the amount of CGT which may be due in respect of the disposal.

Finally, as the Deputy will be aware, it is a longstanding practice that the Minister for Finance does not comment, in advance of the Budget, on any tax matters that might be the subject of Budget decisions.