The latest trend you’ll probably have seen on social media, newspapers and banners in towns is the raffling off homes and other assets. People are either doing it as a means of “selling” their property, or to raise funds for charitable causes. These raffles work by giving you the chance to win a new home for typically a €20-€100 ticket.

Why are people deciding to do this? If you have a three-bed house in Cavan for example, you might make €200,000 by selling it in the normal fashion with an estate agent. If you sold lottery tickets at €50 each however, and managed to sell 10,000 of them, you would be looking at a gain of some €500,000.

What about tax? For any prize winner, according to Revenue, winnings from betting, lotteries, or games with prizes, aren’t liable to capital acquisitions tax or capital gains tax, at a rate of some 33%.

However where the prize won is a property, stamp duty will generally apply. This means that if you win a house or an apartment, you will have to pay stamp duty on the transfer of the property. This is charged at the rate of 1% of the market value of the property up to €1 million and 2% on any balance over €1 million. So, a €350,000 “prize” will result in a tax bill of €3,500. There will also be conveyancing costs, typically of between €1,000 and €2,000. Some people raffling properties may offer to cover such costs but others won’t.

If the winner of the property then wants to sell the property, a tax charge will apply. The base cost for capital gains tax would be the valuation of the property when they won the house, not the amount it raised in the raffle.

For people looking to sell their home by raffling it, the Department of Finance has its eye on such an event in the Finance Bill. It states “The sale of your family home or principal private residence is generally tax free, regardless of how much it sells for and how much of a gain that is on the price you originally paid for it. However, Revenue has clarified that where a principal primary residence is disposed of through a raffle or draw, the capital gains tax relief is limited to gains up to the market value of the property. This means that any gain over the market value of the property will be subject to capital gains tax. People will be subject to capital gains tax at 33% on any gain made over the market value of the private property residence. So, making an extra €150,000 over market value from a raffle would result in a tax bill of almost €50,000.

Earnest is not a tax advisor. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction.

Leave a Reply