Ireland guide
Indexation relief on Irish property bought before 2003
Indexation relief increases the cost of a property for capital gains tax purposes, to strip out inflation up to 31 December 2002. Costs incurred on or before that date are multiplied by Revenue's factor for the year they were incurred. A property bought in 1990/91 has its cost multiplied by 1.442. No indexation applies to costs from 2003 onwards.
| Applies to costs incurred | Up to 31 December 2002 |
| 1974/75 and earlier multiplier | 7.528 |
| 1990/91 multiplier | 1.442 |
| 2002 multiplier | 1.049 |
| 2003 onwards | No indexation (1.000) |
Why does indexation exist?
Without it, a long-held property would be taxed on gains that are simply the effect of inflation rather than any real increase in value. Ireland allowed the cost to be indexed until the relief was frozen for expenditure after 2002. It still matters a great deal for property bought in the 1980s and 1990s and sold today.
How is the multiplier applied?
The purchase price, and the costs of acquisition, are multiplied by the factor for the year the money was spent. Enhancement expenditure is indexed by the factor for the year that work was done, which may differ from the year of purchase. The indexed figure is then deducted from the sale proceeds to give the gain.
Where a cost was incurred before 6 April 1974, the 1974/75 multiplier of 7.528 is used.
What does indexation not do?
It cannot create or increase a loss. It also does not apply to expenditure incurred within 12 months before the disposal, and it stops entirely at 31 December 2002, so a property held since 1995 is indexed only up to that date, not to the date of sale.
Worked example: a property bought in 1990/91
| Sale price | €500,000 |
| Purchase price | €60,000 |
| Indexed by 1.442 | €86,520 |
| Indexation relief | €26,520 |
| Gain after indexation | €413,480 |
| Less personal exemption | −€1,270 |
| Estimated CGT at 33% | €136,029 |
Indexation reduced the taxable gain by €26,520, which is 6% of the tax that would otherwise have been due.
Try your own figures in the Ireland capital gains tax on property calculator.
Common questions
Does indexation still apply in Ireland?
Yes, but only to costs incurred up to 31 December 2002. Expenditure from 2003 onwards is not indexed.
What multiplier applies to a 1990 purchase?
The 1990/91 multiplier of 1.442. A cost of €60,000 becomes €86,520 for capital gains tax purposes.
Can indexation create a loss?
No. Indexation can reduce a gain to nil but cannot turn it into an allowable loss, and it cannot increase a loss that already exists.
Is enhancement expenditure indexed too?
Yes, by the multiplier for the year the work was carried out, provided that was on or before 31 December 2002 and more than 12 months before the disposal.
This is an estimate for general information only, not tax, legal or financial advice. Tax rules are complex and depend on your circumstances, and figures may not reflect the latest changes. Confirm your position with Revenue (revenue.ie) or a qualified tax adviser before acting. The terms of use set out the limits of this estimate and of our liability.
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