A Practical Guide to CGT for Sellers – Principal Private Residence Relief & Calculating Taxable Gains
Introduction
Capital Gains Tax (CGT) is payable when you dispose of an asset that has increased in value – most commonly a house, a plot of land or an investment property. For many Irish homeowners, the biggest concern is whether the sale of their family home will trigger a CGT charge. The good news is that Principal Private Residence (PPR) relief can exempt a large portion, if not all, of the gain.
This guide walks you through:
- The basics of CGT in 2025.
- How PPR relief works, including qualifying periods and land exemptions.
- Step‑by‑step calculations to arrive at your taxable gain.
- Practical tips for filing, payment deadlines and common pitfalls.
Whether you’re a first‑time seller or a seasoned investor, understanding the mechanics of PPR relief can save you thousands of euros.
1. Capital Gains Tax in Ireland – 2025 Overview
| Item | Detail |
|---|---|
| Standard CGT rate | 33 % on taxable gains (applies to most assets). |
| Higher rate | 40 % on certain foreign life policies and investment products (rare for residential sales). |
| Annual exemption | €1,270 per person (€2,540 for a married couple/civil partners) of chargeable gains is tax‑free. |
| Tax year | Calendar year (1 January – 31 December). |
| Payment deadlines | • Disposals 1 Jan‑30 Nov → CGT due 15 Dec same year. • Disposals 1 Dec‑31 Dec → CGT due 31 Jan following year. |
| Return filing deadline | 31 October of the year after disposal (even if no tax is due). |
Key point: The CGT liability is calculated on the taxable gain, which is the chargeable gain minus the annual exemption, any applicable reliefs (including PPR), and allowable losses.
2. Principal Private Residence (PPR) Relief – What Qualifies?
2.1 Core eligibility
You can claim PPR relief if the property was your only or main residence for any part of the period you owned it. The relief also covers:
- A property you provided rent‑free to a widowed parent or an incapacitated relative as their sole residence.
- Up to 1 acre of land surrounding the house (or the portion that is directly associated with the dwelling).
2.2 Qualifying periods
The exemption is calculated on a time‑based proportion:
- Period of actual occupation – the days you lived in the house as your main home.
- Final 12‑month deemed occupation – even if you moved out, the last 12 months of ownership are automatically exempt (introduced to encourage mobility).
- Approved periods of absence – you may still claim relief for periods when you were away for:
- Employment abroad or elsewhere in Ireland (up to 2 years total).
- Full‑time education (up to 2 years total).
- Illness or incapacity (reasonable period).
- Caring for a dependent relative (reasonable period).
All approved absence days are added to the qualifying period for the purpose of the relief.
2.3 Calculating the exempt portion
[ \text{Exempt %} = \frac{\text{Qualifying days (occupation + final 12 months + approved absences)}}{\text{Total days of ownership}} ]
[ \text{Exempt gain} = \text{Exempt %} \times \text{Total gain before relief} ]
The remaining gain is chargeable and subject to CGT after the €1,270 exemption.
2.4 Land exemption
If the property includes up to 1 acre of land that is directly associated with the house (e.g., garden, driveway), that land is automatically exempt, regardless of how long you owned it. Land beyond 1 acre is treated as part of the property value and is subject to the same PPR calculation.
3. Step‑by‑Step: Calculating Taxable Gains on Your Home
Below is a practical worksheet you can follow for any residential disposal.
3.1 Gather the required figures
| Item | Where to find it |
|---|---|
| Sale price | Contract of sale / solicitor’s statement. |
| Acquisition price | Purchase contract, deed, or valuation at time of purchase. |
| Allowable acquisition costs | Stamp duty, legal fees, surveyor fees, registration fees. |
| Allowable disposal costs | Estate agent fees, solicitor’s fees on sale, advertising costs. |
| Improvements | Receipts for extensions, loft conversions, new kitchen, etc. (must add value, not routine maintenance). |
| Capital losses | Losses from other disposals in the same tax year (if any). |
| Dates of ownership | Date of purchase and date of sale (including the day of settlement). |
| Periods of occupation / approved absence | Calendar of dates you lived in the house and any approved absences. |
3.2 Compute the total gain before relief
[ \text{Total Gain} = (\text{Sale price} - \text{Disposal costs}) - (\text{Acquisition price} + \text{Acquisition costs} + \text{Improvement costs}) ]
3.3 Apply PPR relief
- Calculate total days of ownership (including both the purchase and sale dates).
- Count qualifying days – add:
- Days you actually lived there.
- The final 12 months (365 days) or the actual number of days if ownership was less than a year.
- Any approved absence days (up to the statutory limits).
- Determine exempt percentage (see formula in 2.3).
- Exempt gain = Exempt % × Total Gain.
- Chargeable gain = Total Gain – Exempt gain.
3.4 Reduce by the annual exemption and other reliefs
[ \text{Taxable gain} = \max\bigl(0,; \text{Chargeable gain} - €1,270 - \text{Capital losses (if any)}\bigr) ]
3.5 Calculate CGT payable
[ \text{CGT due} = \text{Taxable gain} \times 33% ]
3.6 Example calculation
| Detail | Amount (€) |
|---|---|
| Sale price | 420,000 |
| Sale‑related costs (agent + solicitor) | 12,600 |
| Net sale proceeds | 407,400 |
| Purchase price (2008) | 250,000 |
| Purchase costs (stamp duty + legal) | 12,500 |
| Capital improvements (extension, 2015) | 30,000 |
| Total acquisition cost | 292,500 |
| Total gain before relief | 114,900 |
| Ownership period | 8 years + 45 days (2 949 days) |
| Days lived in house | 2 200 |
| Final 12‑month deemed occupation | 365 |
| Approved absence (12 months work abroad) | 365 |
| Qualifying days | 2 930 |
| Exempt % | 2 930 / 2 949 ≈ 99.4 % |
| Exempt gain | 0.994 × 114,900 ≈ 114,200 |
| Chargeable gain | 114,900 − 114,200 ≈ 700 |
| Annual exemption (single) | 1,270 |
| Taxable gain | 0 (gain below exemption) |
| CGT payable | €0 |
Even though the property made a sizeable profit, the PPR relief (including the final 12‑month rule and a year of approved absence) eliminated the CGT liability.
4. Practical Tips for Sellers
| Tip | Why it matters |
|---|---|
| Keep detailed records of all acquisition, improvement and disposal costs. Receipts, invoices and bank statements are essential if Revenue requests evidence. | |
| Notify Revenue of approved absences (e.g., overseas posting) before you sell. You’ll need to provide documentation such as an employer’s letter or medical certificate. | |
| Consider timing – selling before 31 December gives you a later payment deadline (31 January) and more time to gather paperwork. | |
| Use the ROS CGT calculator – Revenue’s online tool auto‑applies the €1,270 exemption and can handle multiple reliefs in one go. | |
| Seek professional advice if you have mixed‑use periods (part‑rental, part‑residence) or if you inherited the property, as the rules become more nuanced. | |
| Don’t forget the 1‑acre land rule – if your garden exceeds 1 acre, the excess is treated as part of the property value and reduces the relief proportion. | |
| If you’re married or in a civil partnership, combine exemptions – each partner gets €1,270, potentially eliminating a small chargeable gain altogether. |
5. Filing and Paying Your CGT
- Register for CGT on Revenue Online Service (ROS) if you haven’t already.
- Submit the CG1 (or Form 11 for self‑assessment taxpayers) by 31 October of the year following disposal. Include:
- Details of the asset.
- Calculation of the total gain, reliefs claimed and taxable gain.
- Any capital losses you wish to carry forward.
- Pay the tax by the appropriate deadline (15 December or 31 January). ROS allows direct debit or credit‑card payment.
- Keep a copy of the return and supporting documents for at least six years – Revenue may request verification.
6. Common Mistakes to Avoid
| Mistake | Consequence | How to avoid |
|---|---|---|
| Ignoring the final 12‑month exemption | Over‑paying CGT by up to 33 % of the gain. | Always add the last 12 months to your qualifying period, even if you moved out earlier. |
| Failing to claim approved absences | Loss of relief for up to 4 years of qualifying time. | Keep records of work postings, study enrolments or medical certificates and submit them with your CGT return. |
| Mixing residential and rental periods without proper apportionment | Partial loss of PPR relief and possible penalty. | If you let the property, calculate the proportion of the total period that was let and only claim relief for the residential portion. |
| Not including improvement costs | Higher chargeable gain. | Keep invoices for any capital works (extensions, new roof, etc.) – routine maintenance does not qualify. |
| Using market value incorrectly | Over‑ or under‑stating gains. | Market value is only used when a sale price cannot be determined (e.g., gifts, transfers at undervalue). Otherwise, use the actual transaction price. |
| Missing the filing deadline | Late filing penalties (up to €100) and interest on unpaid tax. | Set a calendar reminder for 31 October and file electronically via ROS. |
Conclusion
Navigating Capital Gains Tax on the sale of a home can seem daunting, but with the Principal Private Residence relief most Irish sellers can substantially reduce—or even eliminate—their CGT liability. By:
- Accurately tracking acquisition, improvement and disposal costs,
- Correctly calculating the qualifying period (including the automatic final 12‑month rule and any approved absences),
- Applying the €1,270 annual exemption,
- And filing your return on time,
you’ll ensure a smooth, tax‑efficient sale. When in doubt, a brief consultation with a tax adviser or solicitor can provide peace of mind and confirm that you’ve maximised every relief available.
Happy selling, and may your next chapter be as rewarding as the one you’re leaving behind!