Capital taxes following separation, divorce or dissolution
Introduction
When spouses or civil partners decide to separate and the separation is likely to be permanent, it can affect the way they are taxed.
Here we explain the implications for separating married couples or civil partners. For information about cohabiting couples who are separating, read about Taxation of cohabiting couples.
Capital Gains Tax
Capital Gains Tax (CGT) is a tax charged on the capital gain (profit) made on the disposal of any asset. The difference between the price you paid for the asset and the price you sold it for is considered taxable income.
Disposing of an asset does not just refer to the sale of an asset for money. It includes gifting it, exchanging it or getting compensation or insurance for it. The person making the disposal pays the tax.
Transfers of assets between spouses or civil partners are exempt from CGT. Transfers of assets between spouses or civil partners who are separated are also exempt from CGT if the transfer is made under a separation agreement or a court order.
Transfers of assets between spouses or civil partners following a court order in a decree of divorce or decree of dissolution are also exempt from CGT. Transfers after the granting of a decree are not exempt if they are not ordered by the court.
Separating couples should seek specialist tax advice before entering into arrangements that have Capital Gains Tax implications.
Capital Acquisitions Tax
Capital Acquisitions Tax (CAT) is a tax on gifts and inheritances. The person receiving the gift or inheritance pays the tax. The tax is paid on the open market value of the asset being received.
Transfers of assets between spouses or civil partners, whether by way of gift or inheritance, are exempt from CAT. Separation does not affect this exemption but divorce or dissolution does.
CAT does not apply to a property transfer, ordered by a court, between separated or divorced marriage partners.
Separating couples should seek specialist tax advice before entering into arrangements that have Capital Acquisitions Tax implications.
Stamp Duty
Stamp duty is a tax that is most often associated with the transfer of property, whether by gift or sale.
Transfers of property between spouses or civil partners are exempt from stamp duty.
If spouses or civil partners are separated or divorced, transfers of property which are ordered by a court are exempt from stamp duty.
Read more information about stamp duty here.
Further information
You can read more about capital taxes following separation, divorce and civil annulment on Revenue's website.
Where to apply