If you sell a property, that is not your primary residence, for more than you paid for it, you will have a capital gain which is taxable. Your gain is essentially the sales price of the property minus the present value of purchase price as well as any other allowable expenses. The first €1270 of your gain is not taxable (€2540 for a married couple). We have included the formula below for calculating your CGT liability as well as explaining all the terms.
[ Sales Price - (Present Value of Total Purchase Price including conveyancing and surveyor's fees + Present Value of Enhancement Costs + Selling Costs + 1270*) ] X 33%
*€1270 per person ie €2540 for a married couple where the asset is jointly owned.
The price you expect to achieve for the property if you are considering putting it on the market or the actual price achieved if you have sold it.
You are entitled to index up the purchase price you paid for the property (including conveyancing and sureveyor's fees) to today’s value using the Revenue’s indexation multipliers - our tool below does this automatically for you.
Revenue defines enhancement costs as follows:
“Additional expenditure, i.e., expenditure incurred to add to the value of the asset, so far as the expenditure is reflected in the state or nature of the asset at time of disposal; and expenditure to establish or maintain legal title to the asset, or an interest in or right over it.”
Any money spent on enhancing (adding to the value) of the building over the years can be netted against the taxable gain. In addition, these expenses can be indexed up to today’s value and not just the amount you paid at the time of doing the work. General maintenance expenditure is not admissible as enhancement costs.
When you bought your property, you will have incurred expenses such as legal fees, & surveyor’s expenses. When you sell your property, you will incur estate agency fees and legal fees. These expenses can be netted against your gain. The costs associated with purchasing can be indexed up to present value.
The Euro was introduced to Ireland on Jan 1, 2002. Accordingly if you purchased or inherited a property before this date, the relevant currency will have been Irish Punts and not Euro. In order to convert from Punts to Euro, simply multiply the Punts value by 1.27.
If you lived in a property for a period of time but also rented the property for a period, the gain that accrued during the period in which you lived in the property is not taxable for CGT purposes. Calculate the full gain, then you can exclude the percentage of that gain that occurred while you were living at the property. So if you made a €100,000 gain on a property that was your private residence for 5 years and rented for an additional 5, the taxable gain would be 5/10 X €100,000 = €50,000. If you did live in the property for a period of time, simply input this into our calculator below and we will take that into account.
Properties purchased during these years and held for a minimum of 4 years are exempt for capital gains for the first 7 years of ownership. If held longer than 7 years, the subsequent gain after year 7 is taxed as normal. When calculating the gain that took place after year 7, you take the full gain and divide by the total number of years of ownership to get the gain per year. Multiplying this number by 7 gets you the exempt amount. The amount in excess of this is taxable as normal. Our calculator below takes this exemption into account when calculating the estimated CGT liability.
General running costs of the building over the years cannot be netted against the capital gain.
Disclaimer: Note that this tool is meant as a useful tool but should not be used as a substitute for formal accounting advice. We recommend contacting Parfrey Murphy Chartered Accountants on (0)21 431 0266 or visiting their website here: https://parfreymurphy.ie/.