Revenue Note for Guidance

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Revenue Note for Guidance


Capital gains tax: disposals of development land


This Chapter provides for the capital gains tax charge on disposals of development land. The pertinent definitions are set out (section 648), while the charge to capital gains tax on companies in respect of such disposals and rules in relation to such disposals by company groups are also provided for (section 649). The normal rate of capital gains tax on certain disposals of development land is set out in section 649A. Section 649B provides for a rate of 80% in respect of gains attributable to the rezoning of land. The application of certain capital gains tax reliefs are restricted in the case of disposals of development land, that is, indexation relief (section 651), roll-over relief (section 652) and loss relief (section 653). These restrictions do not apply to disposals of development land by individuals for less than 19,050 in a year of assessment (section 650), and exceptions to the restrictions on the application of roll-over relief are also provided for (section 652).

648 Interpretation (Chapter 2)

“the Act of 1963” is the Local Government (Planning and Development) Act, 1963.

“the Act of 2000” is the Planning and Development Act 2000.

compulsory disposal” is a disposal to an authority possessing compulsory purchase powers which is made either as a result of an actual compulsory purchase order or a formal notice of intention to exercise those powers, but a disposal of development land under section 29 of the Act of 1963 is not to be regarded as a compulsory disposal.

current use value”, in relation to land, or unquoted shares deriving their value or the greater part of their value (that is, over 50 per cent) directly or indirectly from land, is the amount which would be the market value of the land if its value were calculated on the basis that it was at that time, and would remain, unlawful to carry out any development in relation to the land other than development of a minor nature.

development land” is land in the State, or unquoted shares deriving their value or the greater part of their value directly or indirectly from such land, the consideration for the disposal of which, or the market value at the time of disposal, exceeds the current use value at the time the disposal was made.


If 200 acres of a farm is zoned as “agricultural land” and will not receive planning permission for rezoning for development, and its value as farmland is 500,000, then its current use value is 500,000. If, however, it were likely that the land could be rezoned for development and it is sold for, say, 20 million, then it is development land for the purposes of this definition (although it may not yet be rezoned).

“development of a minor nature” is development carried out by certain statutory undertakers (that is, those authorised by statute to carry out certain public development) under section 4 of the Act of 1963 or, on or after 11 March 2002, under section 4 of the Act of 2000. These sections exempt certain developments such as improvement to dwelling places or the installation of certain utilities such as water, gas, electricity, etc. This type of development does not include developments by local authorities under section 2 of the Act of 1963 or, on or after 11 March 2002, under section 2 of the Act of 2000 (i.e., the construction of local authority housing).

relevant disposal” is a disposal of development land made on or after 28 January, 1982.

Relevant Date: Finance Act 2021