Dec 2011 | Budget 2012 - Capital Tax Changes

 

The following measures were announced today by the Minister for Finance in connection with capital taxes. More details will be available on the publication of the Finance Bill in January.

Capital Acquisitions Tax (CAT)

The rate for CAT (gift and inheritance tax) has increased by 5% to 30% in respect of benefits taken on or after 7 December 2011. The Group A tax free threshold (e.g. parent to child) has decreased from €332,084 to €250,000. However unusually there is not a corresponding changes to the other smaller thresholds (eg siblings and strangers).

Capital Gains Tax

The rate for CGT (capital gains tax) has increased to 30% in respect of disposals made on or after 7 December 2011.  A capital gains tax exemption will be available for property purchased after 6 December 2011 until the end of 2013, where that property is held for a period of at least 7 years, on the gain attributable to that 7 year holding period.

Full retirement relief is to be maintained for transfers of farming businesses for individuals aged 55 to 66 between family members. However an upper limit of €3m is being introduced where the individual transferring the assets is over 66 years of age. There will be a two year transitional period for individuals aged 66 or who reach 66 years of age before 31 December 2013. 

IN addition the upper limit of €750,000 for third party transfers is being reduced to €500,000 for individuals aged over 66 years. The above transitional rules will also apply. 

The stated intention is to incentivise the earlier transfer of farms.

This could mean that full retirement relief will not be available for non farming businesses, however that has not yet been announced. Alternatively the relief may remain and the incentive to transfer  before age 66 only be placed on farmers.

Stamp Duty 

Consanguinity relief on transfers of non-residential properties is to be maintained for non residential transfers (other than on shares or leases) to end of 2014 and abolished from 1 January 2015. Consanguinity relief for residential transfers has already been abolished. There is some uncertainty surrounding the Financial Resolution giving effect to this change as it appeared to abolish the consanguinity relief immediately rather than after 1 January 2015, inconsistent with the Budget Statement. However Revenue has confirmed that, by administrative arrangement, the relief will continue for transfers of non residential property until 31 December 2014.

Stamp duty on residential properties is to remain unchanged at 1% up to €1m and 2% thereafter.

Stamp Duty for non-residential property transfers made on or after 7 December 2011 will be reduced to a flat rate of 2% (previously this was on a tiered rate basis reaching a top rate of 6%).

 

For more details see link to the Department of Finance.

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Aileen Keogan | Solicitor & Tax Consultant | 21 The Avenue | Louisa Valley | Leixlip | Co. Kildare | Ireland

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