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Capital Gains

  • 09-10-2007 11:18am
    #1
    ruffles
    Closed Accounts Posts: 34 ✭


    My friend was gifted a site from his mother at the rear to the family home. He is selling it for 285K will he have to pay capital gains tax ?


Comments

  • #2
    smcgiff
    Closed Accounts Posts: 5,943 ✭✭✭smcgiff


    ruffles wrote:
    My friend was gifted a site from his mother at the rear to the family home. He is selling it for 285K will he have to pay capital gains tax ?

    Yes - Quite a lot. He's probably exempt from an Acquisition tax Point of View as he received it from his mother, but the Revenue will get him when he sells it.

    Your friend's mother could possibly have a CGT liability on the gift.


  • #3
    Mr. Incognito
    Registered Users, Registered Users 2 Posts: 9,798 ✭✭✭Mr. Incognito


    Yes.

    The CAT is more than likely exempt as long as he had no previous gifts from his parents that would push him over the threshold.

    However CGT is payable at 20% of the selling Price. His cost is nil. He has an annual exemption of 1270 (i know- woohoo) so

    285,000 @ 20% is 57,000 less 1270 is 55,730 payable to the revenue. You can fill in the CGT details on a Form 11 or 12.


  • #4
    Mack£r
    Closed Accounts Posts: 8 ✭Mack£r


    SetantaL wrote: »
    Yes.

    285,000 @ 20% is 57,000 less 1270 is 55,730 payable to the revenue. You can fill in the CGT details on a Form 11 or 12.

    just a small point the exemption of 1270 is deducted before CGT @ 20% is applied so (285,000-1,270) @ 20% = 56,746


  • #5
    Mr. Incognito
    Registered Users, Registered Users 2 Posts: 9,798 ✭✭✭Mr. Incognito


    Edit


  • #6
    nompere
    Registered Users, Registered Users 2 Posts: 1,678 ✭✭✭nompere


    Section 601(1) TCA 1997 actually reads:

    "601.—(1) An individual shall not be chargeable to capital gains
    tax for a year of assessment if the amount on which he or she is
    chargeable to capital gains tax under section 31 for that year does
    not exceed €1,270."

    The amount on which he is chargeable to tax is the gain, not the tax, so I'm with Mack£r, and SetantaL is going to find the Revenue auditing all his clients!

    ruffles' friend was given a plot of land which had a value at that time, and that value is an allowable deduction from the proceeds - and if the gift took place long enough ago there's probably some indexation to that value as well. See s.547 TCA:-

    "547.—(1) Subject to the Capital Gains Tax Acts, a person’s acquisition
    of an asset shall for the purposes of those Acts be deemed to
    be for a consideration equal to the market value of the asset where—
    (a) the person acquires the asset otherwise than by means of a
    bargain made at arm’s length (including in particular
    where the person acquires it by means of a gift),"


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