Legal
Good News for Property Purchasers...The reader will be aware that an Irish tax resident individual or company is liable to Irish tax on worldwide income and gains
This means that a gain arising on the disposal of property by an Irish tax resident, wherever situate, is liable to Capital Gains Tax (CGT), the rate of which currently stands at 33%.
In an attempt to stimulate the Irish property market the Government has introduced a CGT exemption for all properties that were purchased between the Finance Act 2012 budget date i.e. 7 December 2011 and 31st December 2013.
This relief has now been extended by the Finance (no.2) Act 2013 41/2013 to cover all purchases bought up to and including 31st December 2014.
Tax Free Sale
It will be of interest to investors to note that where a property is purchased between the above mentioned dates and such property is held for a period of greater than seven years, the gains attributed to that seven year period will be exempt from CGT.
There is no obligation for the investor to sell the property after seven years. Where such property is held for a period of greater than seven years, any chargeable gain arising in subsequent years will be reduced in the same proportion that 7 years bears to the period of ownership of the land or building.
For example, if a building which has been held for 10 years is disposed of, the chargeable gain in respect of that that building will be reduced by seven-tenths.
Property within the EEA – 30 Jurisdictions
The relief applies to “land or buildings” i.e. residential or commercial properties within countries of the EEA (i.e. the countries of the European Union, Lichtenstein, Iceland and Norway) Presumably for reasons to do with EU rules against state aid, the relief applies to all such property located in the European Economic Area, including Ireland.
Limitations
In order for the relief to apply the property must be acquired for a consideration equal to the market value, or if acquired from a relative, not less than 75% of the market value on the date acquired. It should be noted that new legislation underpinning the relief contains anti-avoidance measures and provisions designed to guard against artificial arrangements.
For more information on the above please contact Deirdre Farrell, Solicitor and AITI Chartered Tax Consultant (CTA) at www.amoryssolicitors.com