Tax Code
Dail Éireann — 2026-05-06
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Marian Harkin (IND), Sligo-Leitrim

I thank Deputy Scanlon for raising this important issue. I am responding on behalf of the Minister for Finance. The Deputy will be aware that capital gains tax, CGT, is a tax on the gain that arises on the disposal of an asset. The chargeable gain of an asset is the difference between the amount a person received for it - in other words, the sale price - the amount a person paid for it, the purchase price, and any allowable expenses in the meantime. Capital gains tax arises not just on the sale of an asset but also on the transfer or gift of an asset from one individual to another, and that is the issue the Deputy is raising here. Capital gains tax is payable by the disponer of the asset and the current rate is 33%. The first €1,270 of chargeable gains of an individual in any year are exempt from capital gains tax. The rate at which capital gains is charged has varied both upwards and downwards since its introduction back in 1975, and the present rate of 33% has been in place since 2012. It is understood that Deputy Scanlon is referencing a situation where a person is selling a second house, such as an investment property, for the purpose of providing funds to a child to buy their own house and, as such, no relief from capital gains tax applies.
While capital gains tax makes up only a small proportion of overall taxes, it is considered an integral part of the overall taxation system due to the need to ensure as broad a tax base as possible. The purpose of capital gains tax is to ensure fairness. It ensures taxation is not focused solely on income tax and that those who benefit from gains in the value of their assets are included within the tax net on an equitable basis. In doing so, we can limit the need for increases in income tax rates and secure the sustainability of the taxation system against future challenges.
While capital gains tax is a broad-based tax, which applies across the board to virtually all gains that a person can incur, appropriate reliefs are provided in particular circumstances. For instance, section 604 of the 1997 Act provides relief from capital gains tax on the disposal of a person’s principal private residence. A principal private residence is defined as any dwelling house, together with surrounding land, occupied as gardens or grounds up to an area of 1 acre. There is no requirement to pay capital gains tax on gains accrued if such a house is sold. An individual, married couple or civil partners cannot have more than one principal private residence at any one time. The Deputy should note that there may be difficulties with unintended consequences if the rate of capital gains tax were reduced for one category alone. If that were to happen, it would be difficult to distinguish in legislation such a property from other circumstances where second properties are sold, for example, paying off a loan or providing for a pension. There may also be a possible State aid dimension to such a proposal due to the targeting of the measure. In such circumstances, where a reduction to the overall rate of capital gains tax was necessitated, there would be a significant Exchequer cost. For instance, a 5% reduction would result in a cost to the Exchequer of €436 million.

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Record URI: https://data.oireachtas.ie/akn/ie/debateRecord/dail/2026-05-06/debate/main
Retrieved: 2026-08-14T04:54:54+00:00
Sitting date: 2026-05-06