Dáil Éireann Debate, Wednesday - 2 June 2004
113 Mr. Perry asked the Minister for Finance the tax liability that an old aged pensioner will be liable for on the sale of land to a non family member to the value of €100,000; and if he will make a statement on the matter. [16945/04]
View answerI am advised by the Revenue Commissioners that if the land formed part of the grounds of up to one acre of the seller's principal private residence, there would be no liability to capital gains tax unless the sale was one of development land. Otherwise, as a general principle, the capital gain on the sale of land is taxable.
The capital gains tax liability of an old age pensioner on the sale of land to a non-family member for €100,000 will be computed by reference to the chargeable gain on the sale. The chargeable gain is essentially the excess of the sale proceeds, net of incidental costs of sale, over the allowable costs of acquisition of the land being sold. If there were no other chargeable gains in the year, this gain is then reduced by the annual personal exemption of €1,270 or €2,540 if the land is held in joint names with a spouse. The net chargeable gain is taxable at 20%. If the Deputy wishes to supply further details to the Revenue Commissioners a more precise reply can be given. In calculating the tax due, the following factors are relevant. Incidental costs of sale include legal and auctioneers costs.
The cost of valuations required to calculate the gain are also allowed. Allowable costs of acquisition include the actual cost of the land, inclusive of incidental costs. These are similar to the incidental costs incurred on sale and also include stamp duty. If the land was acquired by way of a gift or inheritance the cost of acquisition is its market value at the date of gift or death. If it was acquired prior to 6 April 1974, the market value at 6 April 1974 is substituted for the cost of acquisition. Expenditure wholly and exclusively incurred to enhance the land or to establish, preserve or defend title to or right over the land is also allowable. If the land being sold is part of a larger holding the allowable costs may need to be apportioned by reference to the part disposal rules. Allowable expenditure incurred before 1 January 2003 and more than 12 months prior to sale may be adjusted for inflation by reference to the date on which the expenditure was incurred. This relief is restricted if the sale is one of development land. Development land means land in the State the consideration for the disposal of which exceeds the current use value of that land at the time of sale. Retirement relief may be available if the land had been owned and used by the seller for the purposes of farming or a trade for a period of not less than ten years ending with the sale.
