Michael Cahill (Kerry, Fianna Fail)
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334. To ask the Minister for Finance to change the legislation and exempt compulsory purchase order compensation from capital gains tax, recognising that this is not a voluntary disposal of land; and if he will make a statement on the matter. [48861/25]

Paschal Donohoe (Dublin Central, Fine Gael)
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The acquisition of land 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 land by way of CPO and the price paid for the land (or in certain circumstances, the market value at the time the land was acquired). A deduction may be claimed for costs incurred in acquiring and disposing of the land, e.g. stamp duty, legal fees, auctioneers’ fees.

In the case of land disposed of by way of CPO, the time of disposal for CGT purposes is determined by reference to the date on which compensation proceeds are received and any CGT liability arising is 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 may 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 where certain conditions are met.

The facts and circumstances of each disposal will determine the amount of any CGT due as a result of land being compulsorily acquired, to include the availability of any exemptions or reliefs from CGT which may arise in the context of each specific disposal. There are currently no plans to change the CGT treatment for CPOs.