Capital Gains Tax

CGT and Landlords

As a landlord, whether you are resident or non-resident in Ireland, you will be assessable to CGT on the sale of a property in Ireland.

And CGT is payable on more than just investment property assets! Find out more below.

Capital Gain Tax

What is Capital Gains Tax? Or CGT as it’s often referred to as.
CGT is a tax on capital gains and it applies on the disposal of an asset.

In simple terms, CGT is a tax on gains that arise from the sale of an assets – items such as land, buildings and shares.

The gain to be taxed for CGT purposes is arrived at by taking the sales proceeds and deducting the cost of the asset. 33% tax rate (since 2013) is then applied to the taxable gain to give the tax amount that is payable.

A simple example to illustrate this: If you buy an asset for €200,000 and sell it for €300,000, then for tax purposes you have a gain of €100,000. The CGT charge on this then will be €100,000 at 33%, giving a tax bill of €33,000.

In practice your CGT bill may be reduced by Revenue Reliefs and Exemptions.

For example, you have an annual exemption from CGT of €1,270. So this would reduce your CGT charge in the above example will be reduced €33,000 to €31,730 if this is your only gain in the year.

Another example is the Principal Private Residence (PPR) relief which gives relief from CGT for the % of time a residential property asset was in use as your home.

IMPORTANT
Even if you make a loss you need to make a CGT return to revenue – even in the case of the sale of your principal private residence!

There are many different reliefs and exemptions available from CGT that need to be considered depending on factors such as: the circumstances of the seller or those in which the sale is being made; the type of asset being sold; the length of time the asset was owned by the seller; location of an asset; residency and Domicile of the seller; etc.

How the location of your asset affects your exposure to Irish CGT?

If you sell an asset in Ireland, no matter where you are living, you are chargeable to CGT on the sale of that asset.
If you sell an asset outside of Ireland, you may also be chargeable to CGT on that asset, depending on your residency and domicile statuses.
Most people living in Ireland will be Chargeable to CGT in Ireland on any asset sales anywhere in the world – seek advice!

So what are the implications when you sell your rental property?

When you dispose of your rental property, CGT liability may arise on the disposal. This needs to be looked at on a case by case basis to ensure that you can avail of all tax reliefs and/or exemptions available in your particular case. We can provide specialist tax experience when this occurs.

When do I need to do a CGT Assessment?

Confusingly, there are 2 parts to reporting CGT on an asset sale being:

• Payment requirements
• Reporting requirements

Basically, when you sell assets: firstly you have to calculate if there is an amount due to be paid and make that payment. This is the Payment Requirement.
Whether there is a Payment Requirement or not, you still ALWAYS have to make a return declaring the Asset sale and HOW it was assessed under CGT. This is the Reporting requirement.

When to pay CGT liability

• For disposals made from 1 January to 30 November – CGT payments are due by 15 December same year
• For disposals made from 1 December to 31 December – CGT payments are due by 31 January in the following year.

When to file CGT return

When you dispose of an asset, you must file a return by 31 October of the following year. Return must include all the disposal made during the year.

Remember:

Even if you’ve incurred a loss on the disposal of an asset OR the gain on disposal is fully relieved from CGT (like when you sell a home), you are still required to prepare and file Capital Gain tax return with Reven