The capital gains tax rate and the capital acquisitions tax rate has increased from 25% to 30% with effect from 7 December 2011. The capital acquisition tax thresholds have also been reduced.
There is also a change to the Retirement Relief Exemption for Capital Gains Tax. Individuals over 55 years of age continue to be exempt from Capital Gains Tax on disposal of certain qualifying business assets (broadly business or shares in certain family companies) to his or her child. However where the individual has reached 66, this exemption has been restricted to qualifying assets with a market value up to €3m and no relief available for the excess. Where an individual sells his qualifying business assets the exemption has now been reduced to €500,000 for persons over 66.
Fortunately the above restrictions apply only to disposals made on or after 1 January 2014. This means that persons who are approaching 66 or are already 66 or over have almost two years lead time to transfer or sell assets and avail of the old regime.
A special incentive CGT measure is being introduced for property purchased between 7 December 2011 and the end of 2013. If the property is bought during this period and held for at least 7 years the capital gain relating to that 7 year holding period will be fully relieved from capital gains tax. It also includes all EU and EEA located property. The exemption will work to time apportion gains so that property held for 10 years will be 70% exempt from CGT. It is also possible to benefit from the relief where property has been acquired from a relative at not less than 75% of its market value.