Capital Gains Tax Clearance Certs for Property Sales

by Stephen Royal, Tax Assistant at Contracting PLUS

How do you get Capital Gains Tax Clearance Certs for property sales? is fast becoming the new million-euro question!

No need to phone a friend, we have the answer for you!

The first quarter of 2023 has seen house prices fall In Ireland which may indicate that prices have peaked in most of the country. Coupled with the high demand for housing and the loosening of mortgage rules, we’ve seen an increase in property sales over the last few months, specifically a rise in the sale of high-value houses and apartments.

When CG50A is a requirement

Additional requirements exist when selling houses and apartments worth one million euros or more. Before the closure of any sale of this kind, it’s vital to obtain a Capital Gains Tax Clearance Certificate (CG50A), certificate from the Revenue Commissioners. Failure to obtain CG50A clearance will mean that the purchaser is required to withhold 15% of the purchase price and pay it to Revenue (a significant sum of €150,000 on a €1 million sale).

How to get a CG50A certificate

To obtain a CG50A certificate, the owner must be resident in Ireland or have paid the Capital Gains Tax (CGT) due on the sale (if tax is due). Non-residents will need a PPS number and must register for Capital Gains Tax to complete the process. In our experience, this is generally a last-minute request from the seller’s solicitor.

The application for the certificate requires certain documents before Revenue will process the application namely:

1. A signed Contract or Letter of undertaking to furnish a signed contract.
2.  A letter of undertaking to pay the Capital Gains Tax when it falls due or receipt confirming payment.

As a result of the second requirement, a CGT calculation will be required in every scenario to calculate the CGT liability due or to illustrate that there is no CGT due.

Calculating CGT on house sales

Calculating CGT on the sale of any house is not always straightforward and there are several questions that should be considered such as;

• Was the property your principal private residence (PPR) for the whole period of ownership?
• Did you leave the property for a period for work purposes (there are times where you can claim PPR relief when not living in the property).
• Have you improved the property?
• Have you included all your costs of sale and purchase?
• Are you allowing for inflation?
• Have you claimed your annual exemption, and if jointly owned, have you both claimed the exemption?

CGT50 clearance not obtained

The withholding of 15% of the selling price can be an expensive oversight. It can also result in some or all of the following unnecessary hassles, a delay in closing the sale, a lengthy process to recoup the monies from Revenue using the CG50B certificate, and more stress and cashflow problems, especially if you are relying on this sale for a subsequent purchase.

How we can help

Along with the processing of your CG50A certificate application through Revenue Online Services (ROS), we can help to ensure that you meet your tax obligations to obtain the CG50A clearance certificate without paying more than you should along the way! These details will also need to be included in your end-of-year personal tax return (form 11).

If you’re selling your home or property and urgently need a CG50A clearance, give us a call to discuss your options.

This article has been carefully prepared, but it has been written in general terms and should be seen as broad guidance only.