Capital gains tax in Ireland is charged when you sell or otherwise dispose of an asset for more than it cost you. The standard CGT rate is 33%, and it applies to the gain, not the full sale price, on assets such as investment property, shares and the sale of a business. Whether you are selling a second home, cashing in shares or passing a company to the next generation, it pays to understand the tax before you sign anything.
The rate is fixed, but the exemptions and deadlines change from year to year, so treat the year-specific figures here as current and confirm them with us or with Revenue before you act.
What is capital gains tax?
CGT is a tax on the profit you make when you dispose of a chargeable asset. “Dispose of” usually means selling, but it also covers gifting an asset, exchanging it, or receiving compensation for its loss or destruction. The tax is charged on the chargeable gain, which is broadly the sale proceeds less the original cost and certain allowable expenses.
Common assets that attract CGT in Ireland include:
- Investment or second properties, and sites or land
- Shares and other investments held outside a pension
- The sale of a business or an interest in a company
- Certain valuable personal possessions and assets held abroad
Your own home is generally exempt under principal private residence relief, so most people pay no CGT when they sell the house they live in, provided the conditions are met for the full period of ownership.
How much is CGT and how is the gain worked out?
The CGT rate in Ireland is 33% on most gains. To arrive at the taxable gain, you start with the sale proceeds and deduct:
- The cost of acquiring the asset, including stamp duty and legal fees paid at the time
- Money spent enhancing the asset, such as an extension or improvement to a property
- The incidental costs of selling, such as auctioneer and solicitor fees
Each individual also has an annual exempt amount, a slice of gains each tax year that is free of CGT. The exemption is per person and cannot be carried forward, so couples who jointly own an asset can each use their own allowance, and spreading disposals across more than one tax year can sometimes make use of two years’ exemptions. The exact annual exemption is set by Revenue and can change, so we will confirm the current figure when you plan a sale.
If you make a loss on a disposal, that loss can usually be set against gains in the same year, and any unused loss can generally be carried forward against future gains. Keeping a record of losses is worthwhile because they can reduce a future tax bill.
CGT on property in Ireland
Property is the most common reason people in the Midlands come to us about CGT, and we advise sellers from our Longford office and across the region. The principal private residence is exempt, but the position differs for a property that was ever rented out, used for business or only partly occupied as your home. In those cases part of the gain can be taxable, calculated by reference to the period it qualified for relief.
For investment property and land, the gain is fully chargeable, but the cost, any improvement spending and the costs of sale all reduce it. Timing matters too: the date of disposal for CGT is normally the date of the contract, not the date the money changes hands, which can affect which tax year the gain falls into. There is no simple way to avoid CGT on a genuine investment property, but careful planning and full use of allowable deductions and exemptions keeps the bill to the legitimate minimum.
CGT on shares and investments
Selling shares at a profit is a chargeable event. When you have bought the same shares at different times, special “first in, first out” rules decide which shares you are treated as selling, which affects the cost you can deduct. Share-for-share exchanges, rights issues and company takeovers each have their own treatment, and the rules can be intricate, so it is worth checking the position before you sell rather than after.
Reliefs that can reduce or remove CGT
A number of reliefs can significantly cut a CGT bill, particularly for business and farm owners. The most important for our clients are:
- Retirement relief, despite the name, does not require you to retire. It can substantially reduce or eliminate the CGT on the disposal of a qualifying business or farm, whether you sell to a third party or pass it to your children, subject to age-related conditions and value limits. It is central to most exit and succession plans and works best when set up years in advance.
- Revised entrepreneur relief can apply a reduced CGT rate on qualifying business disposals up to a lifetime limit, where the conditions on ownership and your working role are met.
- Principal private residence relief is the main exemption for your own home, as described above.
The conditions, age limits and value caps on these reliefs are detailed and change periodically, so plan the disposal in good time. Our capital gains tax planning service looks at the whole picture, the asset, the timing, the reliefs and how a sale fits with your wider tax planning, so nothing valuable is left on the table.
Paying and filing your CGT
Ireland operates a pay-and-file system for CGT, and the payment is due before the return. Broadly, tax on gains made in the earlier part of the year is payable in December of that year, and tax on gains made in December is payable the following January. The gain is then reported on your annual self-assessment return, usually the Form 11, in the following year.
The precise payment dates and reporting rules are set by Revenue and can change, so we always confirm the current deadlines for you. Missing a CGT payment date can lead to interest charges, so it is worth diarising the date as soon as a sale is agreed.
Common questions
A few points come up again and again:
- CGT is not the same as CAT. Capital gains tax applies when you sell or gift an asset and make a gain. Capital acquisitions tax, the gift and inheritance tax, is paid by the person who receives a gift or inheritance, at 33%. A single transaction, gifting a property to a child for example, can involve both taxes, with relief available to avoid double taxation in some cases.
- A gift can trigger CGT. Because gifting is a disposal, you can owe CGT on a gift even though no money changed hands, based on the market value of the asset.
- Non-residents are not always outside the net. CGT can still apply to gains on Irish land, buildings and certain business assets even where the owner lives abroad.
Plan before you sell, not after
CGT is one of the few taxes where planning before a transaction makes a real difference to what you keep. The reliefs that matter most, retirement relief in particular, reward owners who plan ahead, and the wrong timing or structure can cost far more than it needs to.
If you are thinking about selling a property, shares or a business, talk to us first. We will work out the likely charge, identify every relief you qualify for and make sure the payment and return are right and on time. Book a free consultation and find out where you stand before you commit.