Capital Gains Tax (CGT) reliefs

Indexation Relief

You might be able to claim Indexation Relief if you owned the asset that you are selling before 2003. Indexation Relief is also known as Inflation Relief.

Indexation Relief means that any costs you paid before 2003, related to the asset, are increased. This increase is based on inflation calculated by the Central Statistics Office.

The relief applies to the:

• purchase price or market value of the asset at the time you became the owner
• cost of acquiring the asset (such as solicitor's and auctioneer's fees)
• cost of enhancing the value of the asset
• cost of disposing the asset.

How do you qualify for Indexation Relief?

Indexation Relief is only available for cost or costs paid for up to 31 December 2002. You must have owned the asset during this time.

Note

Indexation Relief does not apply to any costs paid for in 2003 and later years.

Development Land

Development land is land (including buildings) in the Republic of Ireland which has a higher market value than ‘current use value’. Current use value is the value the land would have if it was not development land. (When no development, other than of a minor nature, could be carried out.)

Indexation Relief applies only to the current use value at the time you became the owner. The development value (current use value deducted from the market value) is an allowable expense but cannot be indexed.

How do you apply Indexation Relief?

You multiply the cost by the  indexation factor for the year you incurred the cost. (The indexation factor is also known as the multiplier.) You can deduct this indexed cost as an allowable expense from your capital gain.

Note

If the date is before 6 April 1974, the indexation factor to use is the multiplier for 1974/5.

How to claim Indexation Relief

Use your indexed cost or costs when you calculate your CGT and file your return.

Next: Farm Restructuring Relief