By Aonghus Sammin www.bradanconsulting.ie
If you have disposed of any assets in the month of December 2011, capital gains tax may be due on that disposal on the 31st January 2012. The rate of CGT has been increased from 25% to 30% on disposal made after 7th December 2011. Not to worry, we at Bradán Consulting are here to help you.
Capital Gains tax (CGT) arises when you buy an asset for one price and then in turn sell it on for a higher price, this is also the case with gifts as the Revenue Commissioner considers that you have made a ‘capital gain’ and that you may be liable for tax.
From 2009 onwards, the tax year is divided into two periods for CGT payment purposes, these are as follows:
- Initial period – 1st January to 30th November, with tax for disposals during this period due by the 15th December.
- Later period – 1st December to 31st December, with tax for disposals during this period due by the following 31st January.
CGT is a self assessment tax and you are obliged to inform the revenue of these transactions and failure to do so may results in fines or penalties. However the good news is there are certain reliefs and exemptions available to you:
- The first €1,270 of the capital gain made each year is not taxable.
- You will not be liable for CGT if during the period you sold a dwelling house and that house was your principle residence during the period in which you owned the house. There may be certain restrictions on this relief or partial relief may apply.
- If you gift a site to a child who in turn constructs their private residence on that site, providing the site isn’t worth more than €254,000 there may not be tax due.
- There will be no capital gains tax on bonuses from post office or state savings schemes or from the disposal of government stocks.
- CGT also does not apply to any winnings from gambling, the lottery or competitions.
An additional relief which is available to reduce your CGT liability is retirement relief, which may occur on the disposal of a business or farm where the individual disposing of them is aged 55 or over, has owned the business for more than five years and the amount received does not exceed €750,000.
However, there is no limit where the disposal is to a member of your family that has worked in the business.
Finally another way to reduce your bill is if you have incurred expenses or improved in some way the asset you have sold, you may be able to claim them back against your CGT tax bill.
If you think you may be liable for tax and require our assistance in calculating your CGT liability or would like any further information on exemptions or reliefs please don’t hesitate to contact us at +353 91 475 321 or visit www.bradanconsulting.ie for more information.