Tag: Capital gains tax

Disposals to Spouse

July 2, 2013

Where an asset is transferred from one spouse to another there is no Capital Gains Tax, no Stamp Duty and no Gift or Inheritance Tax. In effect the spouse who receives the asset is deemed to have acquired it at the same time and cost price, which applied to the spouse who transferred it.

The benefit of this relief is not available in certain circumstances where the recipient spouse is non-resident here for tax purposes.

This is an important relief from taxation for married couples and when combined with other tax reliefs in relation to property it can be used to one’s advantage.

Disposal of Site to Child

July 2, 2013

An exemption from Capital Gains Tax is available for a parent who transfers a site to a child for the purpose of building their principal private residence on the site.

The value of the site must not exceed €500,000. The size of the site must not exceed 1 acre excluding the ground upon which the residence will be built.

If the child subsequently disposes of the site or after building a house on the site has not occupied it for a period of three years, then the benefit of the exemption will be withdrawn by the Revenue. The child will have to pay the capital gains tax that the parent would have had to pay on the transfer of the site to them as well as any tax due on the sale of the site by them.

Foreign Property

July 2, 2013

Most Irish resident individuals will be liable for Irish tax on disposals of assets abroad. If tax is also payable in the country where the property was situated and Ireland has a double taxation agreement with that country then a credit may be allowed against the Irish tax liability for any tax paid in the foreign country.

An important amendment applies from 1st January 2007 onwards which provides that capital gains tax paid in respect of disposals of property in Belgium, Cyprus, France, Germany, Italy, Japan, Luxembourg, the Netherlands, Pakistan and Zambia will now be allowed as a credit against capital gains tax payable on the disposal in Ireland. Prior to this amendment capital gains tax payable in the countries listed was not allowed as a credit against Irish tax but was allowed as a deduction in calculating the Irish tax liability. This gave rise to a certain amount of double taxation.

The gain or loss must always be calculated in Euros. You do not calculate the gain/loss in the foreign currency and then convert to it to Euros. The original cost price of the property is converted to IR£/Euros based on exchange rates at date of purchase. The sale proceeds are also converted to Euros at the time of sale.

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