Dáil Éireann Debate, Tuesday - 31 May 2022
165. Deputy Pearse Doherty asked the Minister for Finance the time limit, or minimum length of time for which a person has lived in a property before selling, in order to qualify for principal private residence relief; and if he will make a statement on the matter. [27301/22]
Amharc ar fhreagraIn general, capital gains tax (CGT) is chargeable on a gain arising on the disposal of an asset at the rate of 33%. The first €1,270 of chargeable gains of an individual in any year are exempt from CGT.
Section 604 of the Taxes Consolidation Act, 1997 provides relief from CGT on the disposal of one’s principal private residence, being a dwelling house (including an apartment) together with land occupied as its gardens or grounds up to an area (exclusive of the site of the residence) of one acre. If a property was occupied by an individual as his or her principal private residence for all or part of his or her period of ownership, then full or partial relief from CGT will be available where a chargeable gain arises on the disposal of that property. The last 12 months of ownership of the property by the individual is treated as a period of occupation for the purpose of this relief.
There are a number of exclusions from the relief:
- Relief is not given for any part of the gain which is applicable to a part of a residence which is used exclusively for the purposes of a trade, business or profession.
- Relief is also not given for any part of the gain which is applicable to “development land value”. This may occur where the proceeds from the sale of the residence exceed its market value for use as a dwelling.
- Finally, an individual cannot have more than one principal private residence at any one time.
Where the property was not occupied by the individual as his or her only or main residence throughout the period of ownership, only a proportion of the gain on the disposal is exempt. This proportion is the same proportion that the length of the period of owner-occupation (inclusive of the last 12 months of ownership) bears to the length of the period of ownership. The balance of the gain is chargeable to CGT in the normal manner.
The relief does not apply where the property was acquired wholly or mainly for the purposes of realising a gain on its disposal, nor does it apply to any part of the gain on the disposal which is attributable to enhancement expenditure incurred wholly or mainly for the purposes of realising a gain on the disposal of the property.
To answer the specific question posed by the Deputy, the legislation does not impose a minimum length of time for which a person is required to reside in a property before selling in order to qualify, in full or in part, for principal private residence relief, subject to the conditions outlined above being met. In particular, relief will not apply where a property was acquired wholly or mainly for the purpose of realising a gain on its disposal.
Finally, I am advised by Revenue that the specific facts and circumstances of each disposal will determine the amount of any CGT due.
