Dáil Éireann Debate, Tuesday - 7 October 2025
124. Deputy Tom Brabazon asked the Minister for Finance the reason a spouse who is legally required to vacate the family home under judicial separation loses principal private residence relief for capital gains tax; and if his Department will consider amending the Finance Bill to treat such absences in line with other valid exemptions such as employment abroad. [53021/25]
Amharc ar fhreagraCapital gains tax (CGT) arises in respect of chargeable gains accruing on the disposal of an asset, including residential property, at the rate of 33%. The first €1,270 of chargeable gains of an individual in any year are exempt from CGT.
Section 604 of the Taxes Consolidation Act 1997 (TCA 1997) provides relief from CGT on the disposal of one’s principal private residence (PPR), being a dwelling house together with land occupied as its gardens or grounds up to an area (exclusive of the site of the dwelling house) of one acre. An individual may only have one PPR at any given point in time.
If a property was occupied by an individual as their PPR for all or part of their period of ownership, then full or partial relief from CGT will be available where a chargeable gain arises on the disposal of that property, or of their interest in that property. The last 12 months of ownership of such a property by the individual is treated as a period of occupation for the purpose of this relief. By way of example, if an individual both owned and occupied a residential property as their PPR for 10 years prior to disposal, no CGT will arise in respect of any chargeable gain which may accrue to that individual on foot of their disposal of same. However, if the individual only occupied the property as their PPR for 7 of the 10 years in which they owned the property, they will pay CGT in respect of 20% of the chargeable gain which may arise on foot of the disposal, as the portion of the gain which relates to the period in which the individual occupied, or is deemed to have occupied, the property as their PPR is fully relieved from CGT.
Section 1030 TCA 1997 provides that where a person who has obtained a decree of judicial separation, or is the subject of a relief order, under the Family Law Act 1995 disposes of an asset to his or her spouse pursuant to an order under that Act, a charge to CGT does not arise. This is also the case should the disposal take place on foot of a deed of separation. This means that where a spouse is legally required to vacate the family home and transfers their interest in the home to their spouse in such circumstances, the transfer will not be chargeable to CGT.
It may be the case that the spouse who is legally required to vacate the family home under judicial separation does so without transferring their interest in the family home to their spouse. In such circumstances, should the property be sold at some point in the future, PPR relief may apply to the portion of any chargeable gain arising on the transfer of the spouse’s interest in the property at that future date which relates to the period in which the spouse occupied, or is deemed to have occupied, the property as their PPR, in accordance with section 604 TCA 1997. Section 604 TCA 1997 does not provide for the spouse to be deemed to have occupied the family home from the time they vacated the property in accordance with the terms of the judicial separation to the date on which they transferred their interest in same, other than where that period falls within the last 12 months of their ownership of the property.
It should be noted that the specific facts and circumstances which apply at the time of disposal of, or of an interest in, the property in question will determine the application of any relief and the amount of CGT which may be due in respect of the disposal.
As the Deputy will be aware, it is a longstanding practice that the Minister for Finance does not comment, in advance of the Budget, on any tax matters that might be the subject of Budget decisions.
