CAPITAL GAINS TAX ON CPO’S

Landowners who reaped bonanza payments from compulsory purchase orders (CPO) in the Celtic Tiger years can expect a call from the Revenue, The Sunday Business Post reports.

“Hundreds of millions of euro were paid out to landowners in recent years when their land was bought under CPOs to build motorways and other infrastructure projects,” the newspaper notes. “The tax authority has now started auditing people who received CPO payments to see if they have paid capital gains tax, which is charged at 25%.”

Quoting internal Revenue documents, the newspaper says of the 50 audits already conducted, only seven resulted in a zero tax liability. The investigations have begun in Carlow, Kilkenny, Kildare, Laois, Meath, Tipperary, Waterford, Wexford and Wicklow. The Revenue has written to the roads managers in all of these counties looking for details of all CPO payments made in recent years.

As the newspaper notes, most of the country’s main motorways pass through those counties, including the recently-built M3 between Dublin and Meath, the M7 between Dublin and Limerick, the M8 to Cork, and the M9 to Waterford.

Laois County Council paid €54.9m to 135 landowners along the final section of the M7 based on 2006 valuations. Under CPO, the sale price is based on the value of the land when a local authority first moves to take possession of it. So, even though the price of land has plummeted in recent years, boom-time prices were paid.

Noone Casey has significant experience in planning for CGT  on CPO’s. Contact Noone Casey immediately if you believe you have potential CGT problems in this regard.