Capital Gains Tax
An individual’s principal private residence, together with land occupied as its gardens or grounds up to a maximum of one acre, is exempt from CGT if the individual has used it as his / her principal private residence throughout his / her period of ownership.
In addition to the above relief, further relief may be available in respect of a gain arising to him / her on the disposal of a house which was used by a dependent relative as that relative’s sole residence. The house must have been provided to the dependent relative free of rent or any other consideration i.e. it must have been provided gratuitously.
Dependent relative in relation to an individual means:
– A relative of the individual (or of the wife or husband of the individual) who is incapacitated by old age or infirmity from maintaining himself or herself, or
– The widowed mother, or
– The widowed father whether or not so incapacitated, of the individual or of the wife or husband of the individual.
Dependent relative relief is given by treating the property as if it were the principal private residence of the taxpayer during the period for which it was occupied by the dependent relative. This does not in any way restrict the taxpayer’s ability to claim principal private residence relief on the disposal of his / her own residence.
A dependent relative tax credit can be claimed by an individual if he / she maintains at his / her own expense:
(a) A relative of his / her or of his / her spouse who is incapacitated by old age or infirmity from maintaining himself / herself, or
(b) His / her or spouse’s widowed parent, or
(c) His / her son or daughter who is resident with him / her and upon whom he / she is dependent by reason of old age or infirmity.
If the income of the dependent relative exceeds a specified limit no tax credit is due. For the tax year 2012 the specified limit is €13,837.