How does capital gains tax indexation relief work?
CGT Indexation Relief (also known as ‘inflation relief’) may be claimed if you owned the asset such as property or shares that you are selling before 2003.
With Indexation Relief, the market value of the asset at the time you became the owner is increased. This increase is based on inflation calculated by the Central Statistics Office.
For example:
John bought an investment property in June 1990 for €50,000. He incurred costs of €2,000 on the purchase of the property. He sells the house in 2017.
The purchase price and the costs (€52,000) are indexed by the relevant indexation factor (1.442), totalling €74,984. This sum is deducted from the sale price of the property in calculating the amount of CGT due.
Subject to qualifying conditions
Any queries on the above give me a call on 091 763817 or email me at oliver@taxreturnhelp.ie
