Vol. 559 No. 3
96 Mr. Naughten asked the Minister for Finance the categories of landowners who have exemption for capital gains tax under CPO acquisitions; the mechanism of calculating capital gains tax for landowners who inherited land; and if he will make a statement on the matter. [26222/02]
Prior to the budget announcement on 4 December 2002, there were two provisions of the legislation governing capital gains tax, now the Taxes Consolidation Act, 1997, which allowed deferral of capital gains tax arising on gains from the disposal of certain assets where the proceeds of disposal were re-invested in certain other assets.
One of the provisions in place since 1975, and commonly known as roll-over relief, permitted the gain on the disposal of certain assets of a trade to be deferred where the proceeds were reinvested in such assets. The assets concerned included plant and machinery, goodwill of the trade, and land and buildings occupied and used for the purposes of the trade, including farming. Prior to the recent budget announcement, subsequent legislative amendments to the capital gains tax Acts restricted this relief, in the case of a disposal of development land, to disposals of such land for environmental reasons; disposals of such land by an authorised racecourse or authorised greyhound track; disposals of such land to the Dublin Docklands Development Authority; and disposals of such land by an amateur sports body.
The other relevant provision allowed a deferral of capital gains tax where property was disposed of under a CPO and the proceeds re-invested in acquiring similar property. Prior to the recent budget announcement, this relief was restricted in the case of a disposal of development land, to land acquired for road construction; and land acquired from an amateur sports body. Neither of these two relieving provisions will now apply in respect of disposals on or after 4 December 2002.
For capital gains tax purposes, inherited land is acquired at its market value at the date of death of the testator or, if later, its market value at 6 April 1974. The chargeable gain on a subsequent sale of such land is based on the sale price less that value, with an indexation relief applying in respect of inflation. As announced in the recent budget, this indexation for future disposals applies only up to 31 December 2002 and is calculated using an indexation table, which is based upon the consumer price index.
