CGT relief for disposals of certain land and buildings under section 604A of the Taxes Consolidation Act 1997 - treatment of enhancement expenditure

Section 604A of the Taxes Consolidation Act 1997 (inserted by section 64 of the Finance Act 2012) introduced a capital gains tax relief on disposals of land or buildings acquired in the period commencing on 7 December 2011 and ending on 31 December 2013. Section 44 of the Finance (No. 2) Act 2013 extended the period within which the land or buildings may be acquired for the purposes of the relief to 31 December 2014.

Part 19.07.03a of the IT-CGT-CT Manual, is amended to clarify:

• That the relief applies to the gain on the disposal of land or buildings that were acquired in the period from 7 December 2011 to 31 December 2014 (both dates inclusive).
• That for the purposes of the relief "time of acquisition" and "time of disposal" have their normal meaning by reference to Section 542, TCA 1997.
• That no distinction need be made as between "land" or "buildings" for the purposes of the relief, as any building situated on land is not an asset separate and distinct from the land.
• That enhancement expenditure may be incurred at any time between the date of acquisition and disposal (including expenditure incurred on the construction of buildings on land or the completion of partially built buildings), without affecting entitlement to the relief.

In particular it should be noted that:

Land or buildings will be treated as acquired on or before 31 December 2014 where either

• An unconditional contract has been made on or before that date (and regardless of the fact that the asset may be conveyed or transferred after that date), or
• A contract is made subject to a condition precedent and the condition is satisfied on or before that date.

12 December 2014