Capital Gains Spousal exemptions for separating non-residents

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Cody1001

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Even accountants I've spoken to seem unclear on this so any help/ pointers to specific Revenue regs would be great:

Situation
  • Own house in Ireland - part PPR, part investment
  • Separating from spouse - Consent orders to be signed Dec 2023 in Australia, likely ratified by court January 2024 - will look to get these recognised in Ireland.
  • Me - resident in Ireland 2022 and 2023. Not resident in 2024.
  • Ex-Husband - not resident in Ireland

2024 - Ex-husband will assign his half of Irish house to me.

Questions:
  1. Is my understanding correct that we cannot avail of exemption for CGT on his disposal to me as I am non resident for 2024 onwards? Also there is some uncertainty about whether Australian separation agreement will qualify. He will pay about 30k in CGT.
  2. Secondly - even if we could avail of it, I don't want to as I plan to sell this house within the next couple of years on my return to Ireland and if he does not pay his CGT now I will need to pay his 30k, plus my share of the CGT. With that in mind can I 'opt" not to agree to avail of the exemption even if it was available?
Could I be held liable if he doesn't pay it?

Any help would be greatly appreciated.

The closest I've found is in :Separated Spouses: transfer of assets Part 44-02-02" which talks about

2.1 Relief disallowed

...The no gain/no loss rule does not apply to... if the acquiring spouse could not be taxed in the State (for the year of assessment in which the acquisition occurs) on a disposal of the asset in that year and a gain had accrued on that disposal. Such a scenario might arise where the taxing rights on such a
disposal, under a Double Taxation Agreement, rested with a foreign jurisdiction.
 
You might get some pointers or links on askaboutmoney but you should not rely on any answers you get here.

But for a very specific issue like this including residency issues, you need to talk to not only a tax specialist, but a tax specialist who specialises in residency issues.

Brendan
 
As Brendan said above, get specialist advice on the matter.

My reading of the situation is that the CGT exemption could potentially apply here.

Separation orders made by a court in a foreign jurisdiction analogous to one made by an Irish court are "entitled to be recognised to be valid in the State". This is outlined in the Revenue guidance document you referenced. Be aware that it is not sufficient that a couple are to be separated by a deed of separation - the transfer of the property must be made in execution of the terms of the deed/court order i.e. the court order must require the asset to be transferred.

In 2024 your tax status will be:
- non resident, and
- non ordinarily resident (as you were not tax resident in Ireland for the three preceding tax years).

As a result, you are taxable (liable to Irish CGT) on any gains on Irish specified assets. The house you jointly own comes under the category of specified asset.

The Revenue guidance you referenced states that the no gain/no loss treatment will not apply if the acquiring spouse could not be taxed on a disposal of the asset in the year that the disposal to that spouse takes place. Even though you are non resident, you are still liable to tax on the disposal of an Irish specified asset. It appears to me that your spouse could avail of the CGT exemption (if the separation order is recognised and the court order requires the transfer) and you would acquire his original base cost of the asset and ultimately the full CGT will be payable by you on the disposal of the asset in the future.

Assuming the above is the correct tax treatment (and again, get advice on this), you will need to factor this in to the separation sums regarding the fair division of assets etc.
 
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