Capital Gains Tax – Budget 2014 relief for first 7 years of ownership
Capital Gains Tax (CGT) is a tax charged on the capital gain (profit) made on the disposal of any asset. It is payable by the person making the disposal. The gain/profit (the difference between the price you paid for the asset and the price you sold it for) is considered taxable income. The calculations in coming to the final taxable income is something that should be carried out with the assistance of a professional advisor to ensure you include all reliefs and exemptions allowed.
In the 2014 Budget the relief from Capital Gains Tax (CGT) (for the first 7 years of ownership) for properties purchased from the 7 December 2011 was extended by one year to include properties bought to the end of 2014. Where property purchased in this period is held for seven years the gains accrued in that period will not attract CGT.
The purpose of this new taxation incentive is to encourage investors to invest and re-invest in assets and to stimulate growth in the economy. The current rate of CGT is 33%. The new incentive relief from CGT was introduced for the first 7 years of ownership for properties bought between 7 December 2011 and the end of 2013 initially and now extended to the end of 2014, where the property is held for more than 7 years.
The relief applies to all property, whether residential or non-residential. The relief does not apply if a property is sold within 7 years of its acquisition. If it is sold more than 7 years after acquisition and a gain is made on the sale, relief will be given for the initial 7-year holding period. For example, if the property was bought in March 2014 and sold in March 2022, the property would have been held for 8 years, so 7/8 of any gain will be relieved from CGT and 1/8 is taxable.
This relief applies to land or buildings in the State and to land or buildings situated in any EEA state.
If you require any advice in relation to the issue of purchasing or selling your property then please do not hesitate in contacting us directly in the office on 01 2300022 or by e-mail.