Dáil Éireann Debate, Tuesday - 27 April 2004
283 Mr. Kehoe asked the Minister for Finance if an individual wishes to sell part of their yard attached to their commercial premises that is also their main residence will have to pay capital gains tax; and if he will make a statement on the matter. [11854/04]
View answerI am advised by the Revenue Commissioners that a disposal of a yard which is attached to a commercial premises and where the premises is also a principal private residence, will give rise to a chargeable gain subject to capital gains tax.
The sale of the yard will constitute a part-disposal of the entire property and a calculation of capital gain will be made. It will then be necessary to apportion the gain between commercial and private use. To the extent that the yard had a use as part of a principal private residence and the yard was not development land, the part of gain referable to that principal private residence use will be exempted. The part of the gain referable to commercial use will be charged to capital gains tax.
However, if the yard is development land where the proceeds represent more than current use value, then a calculation of overall gain will be made and capital gains tax will apply as follows. The increase in current use value will be chargeable and indexation relief will be available only in respect of years to 2002. The increase in development value will be chargeable and indexation relief will not be available. If the gain referable is to principal private residential use then the increase in current use value will be exempt. The increase in development value will be chargeable and indexation relief will not be available.
Section 604 of the Taxes Consolidation Act 1997 is the main governing provision but the calculation in the circumstances described are a little complex. It is, therefore, suggested that the individual in question should contact the relevant inspector of taxes in the Revenue Commissioners to discuss this particular case in detail.
