Capital Gains Tax (CGT) when disposing of a foreign property
When you dispose of a foreign property you may have to pay CGT in the country the property is in.
When do you pay Irish CGT?
If you dispose of a foreign property, and are resident or ordinarily resident in Ireland, you must pay Irish CGT.
You might be resident but not domiciled in Ireland. If you are, you will only have to pay Irish CGT on the money that you bring into Ireland.
You might have disposed of a UK property before 20 November 2008. If you did, you must pay Irish CGT on the full amount, regardless of your domicile status.
Foreign property sold through a foreign company
You will have to pay Irish CGT when your foreign company sells your foreign property if:
- You are a participator in the company. A participator is someone entitled to a share or interest in the capital or income of the company.
- The foreign company is a close company (that is, if it is resident in Ireland). Under Irish law, a close company is one controlled by five or fewer participators.
You might not receive your share of the sale proceeds at the time the gain was made by the company. If this is the case, you must pay Irish CGT on time.
You might receive your share of the sale proceeds within two years of when the gain was made. If you do, the foreign CGT you paid can be offset against any Irish CGT you owe in respect of the gain.
You might own a property through a shareholding in a non-close company. If you do, you must pay Irish CGT on the disposal of your share in the company.
‘Flipping’ a foreign property
You might buy a foreign property after seeing the building plans only and sell it for profit before construction is completed. This is known as flipping a property. You will have to pay Irish CGT on any gain that you receive from selling the property.
If you are in the business of buying and selling properties, Revenue may treat the gain as income. You would then have to pay Income Tax (IT) on it and not CGT.
Giving a gift of foreign property
If you give a gift of foreign property, you will have to pay CGT on the full market value of the property. The market value is the best price that you could sell your property for on the open market.
The person that you give the property to may have to pay Irish Capital Acquisitions Tax (CAT).
You might have paid Irish CGT on the disposal of the property. If so, you may deduct this as a credit from the CAT that the recipient must pay.
Next: Losses on the disposal of foreign property