Dáil Éireann Debate, Tuesday - 7 December 2004
166 Mr. Fleming asked the Minister for Finance the situation regarding capital gains tax in respect of land acquired under a compulsory purchase order for road construction; the circumstances under which retirement relief can be claimed resulting in reduced or no capital gains tax being payable; and the rules regarding indexation and any other reliefs that are available to landowners to reduce their capital gains tax bill in these circumstances. [32336/04]
View answerI am advised by the Revenue Commissioners that the present position regarding capital gains tax and the compulsory purchase of land depends on a number of variables, including the date, whether the land was used for farming and the age of the land owner. The following sets out the general position, but if the Deputy has a specific case in mind, or would like further details he should contact the Revenue Commissioners.
The chargeable gain on land sold under a compulsory purchase order is the difference between the compensation received, net of the incidental costs of disposal, and the aggregate of the cost, or deemed cost, of acquisition of the land, including the incidental costs of acquisition, and enhancement expenditure after adjusting these costs for inflation as appropriate. The first €1,270 of an individual's annual gains is exempt and the balance is chargeable at 20%.
Where the disposal is for the purposes of road-building or widening and the person making the disposal is engaged in farming and, immediately before the disposal, the land was used for the purposes of farming, the capital gains tax liability will not arise in respect of such a disposal until the year of assessment in which the compensation is received.
In general, allowable expenditure incurred before 1 January 2003 may be adjusted for inflation. In the case of development land this relief is restricted to the current use value of the land at the date of acquisition together with the costs of acquisition applicable to that value. Gains on the disposal of "qualifying assets" under section 598 of the Taxes Consolidation Act 1997 by individuals aged 55 years and over are exempt from capital gains tax, subject to certain conditions. One of these conditions is that the aggregate consideration for the disposal of such assets does not exceed €500,000. In ascertaining whether this threshold applies to a particular disposal the consideration received on the disposal of all "qualifying assets" must be aggregated. Marginal relief may apply where the consideration does not greatly exceed this amount.
In certain circumstances, a person who disposed of land before 4 December 2002 to enable an authority construct, widen or extend a road or for connected purposes, and who re-invests the proceeds in replacement assets, may be entitled to defer payment of capital gains tax. Reinvestment must be made within a specified time frame. Partial relief may be due where less than the full proceeds are re-invested. It is important to note that this relief does not apply for disposals on or after 4 December 2002 except where replacement assets were acquired before 4 December 2002 and the related original assets, which had not been disposed of under the compulsory purchase order before that date, were disposed of by 31 December 2003.
167 Mr. Hogan asked the Minister for Finance when a tax clearance certificate will issue to a person (details supplied) in County Kilkenny. [32362/04]
View answerI am informed by the Revenue Commissioners that they have no record of receiving an application for a tax clearance certificate from the taxpayer. The appropriate application form was posted to the person concerned on 3 December 2004, for completion. On receipt of the completed application form, the application will be processed.
