Capital Gains Tax (CGT) is a tax on any profit you make when you dispose of an asset. It only concerns the amount you gain, meaning it does not apply to the price you initially paid for the asset, nor for any expenses you incurred in developing it.
For example, if you purchase a house for €100,000, spend €40,000 renovating it and sell the asset for €200,000, you will be subject to CGT on your gain of €60,000.
Anything of value that can be converted into cash is considered an asset. You can dispose of an asset by:
- Selling it.
- Exchanging it.
- Giving it away as a gift.
Receiving insurance compensation for it.