I move amendment No. 76:
In page 295, between lines 7 and 8, to insert the following:
"195.–The Principal Act is hereby amended by the insertion of the following section after section 58:
‘58A. (1) In this section–
"Family Home" means any property which if the donee or successor were the owner prior to the gift or inheritance would be the principal private residence of such person within the meaning of section 604 of the Taxes Consolidation Act, 1997;
"Family Member" means a child, brother, sister or child of a brother or sister or a person in respect of whom the disponer stands in loco parentis who is domiciled in the State and in respect of whom not more than 50 per cent of the market value of the property to which the individual is beneficially entitled in possession, excluding any pension or death in service rights payable to the donee or successor on the death of the disponer or spouse of the disponer, is represented by the market value of property in the State which consists of a family home. For the purpose of this definition a deduction shall be made from the market value of a family home for any debts or incumbrances;
"Taxable Value of a Family Home" means the market value of the property reduced by 90 per cent.
(2) In so far as any gift or inheritance consists of a family home:
(a) at the date of the gift or at the date of the inheritance, and
(b) at the valuation date,
and is taken by a donee or successor who is, on the valuation date and after taking the gift or inheritance, a family member, the provisions of section 18 (other than subsection 7(b) thereof) shall apply in relation to a family home as they apply in relation to other property subject to the following modifications:
(i) in subsection (1) of that section, the reference to market value shall be construed as a reference to the taxable value of a family home;
(ii) where a deduction is made for any liability, cost or expense in accordance with subsection (1) of that section only a proportion of such liability cost or expense shall be deducted and that proportion shall be the proportion that the taxable value of a family home bears to the market value of that property; and
(iii) where a deduction is to be made for any consideration under subsection (2) or (4)(b) of that section, only a proportion of such consideration shall be deducted and that proportion shall be the proportion that the taxable value of a family home bears to the market value of that property.
(3) Where a taxable gift or a taxable inheritance is taken by a donee or successor who is a family member subject to the condition that the whole or part thereof will be invested in a family home and such condition is complied with within two years after the date of the gift or the date of the inheritance, then the gift or inheritance shall be deemed, for the purposes of this section, to have consisted –
(a) at the date of the gift or at the date of the inheritance; and
(b) at the valuation date,
of a family home to the extent to which the gift or inheritance is subject to such condition and has been so invested.
(4) (a) The taxable value of a family home shall cease to be applicable to a family home if and to the extent that such property, or any family home which directly or indirectly replaces such property:
(i) is sold or compulsorily acquired within the period of ten years after the date of the gift or the date of the inheritance, and
(ii) is not replaced within a year of the sale or compulsory acquisition, by another family home,
and tax shall be chargeable in respect of the gift or inheritance as if the property was not property which qualified for this relief:
Provided that this paragraph shall not have effect where the donee or successor dies before the family home is sold or compulsorily acquired.
(b) If an arrangement is made, in the administration of property subject to a disposition, for the appropriation of property in or towards the satisfaction of a benefit under the disposition, such arrangement shall be deemed not to be a sale or compulsory acquisition for the purposes of paragraph (a).
(c) The taxable value in relation to a gift or inheritance referred to in subsection (2) shall cease to be applicable to a family home if the donee or successor ceases to reside in the family home for any period of time which would not qualify for relief from Capital Gains Tax on any sale under the provisions of section 604 of the Taxes Consolidation Act, 1997.
(d) The taxable value in relation to a gift or inheritance referred to in subsection (2) shall not apply if the donee or successor is the owner of any property which is occupied by the donee or successor or is available to the donee or successor for their occupation excluding a property held under a lease or tenancy by the donee or successor from a person who is not connected to the donee or successor. For the purpose of this subsection, a person shall be connected with the donee or successor if that person is a spouse of the donee or successor, the relatives of the donee or successor, nominees of the donee or successor, nominees of a relative of the donee or successor, and the trustees of a settlement whose objects include the donee or successor or relative of the donee or successor. A nominee includes a person who holds shares in a company or any property directly or indirectly on behalf of any other person.
(5) for the purpose of this section if, in the administration of property subject to a disposition, property is appropriated in or towards the satisfaction of a benefit in respect of which a person is deemed to take a gift or an inheritance under the disposition, the property so appropriated, if it was subject to the disposition at the date of the gift or at the date of the inheritance, shall be deemed to have been comprised in that gift or inheritance at the date of the gift or at the date of the inheritance.'.".
The Minister has already recognised in the Finance Bill the taxation difficulties being experienced by certain classes of taxpayer as a result of rising property prices in Dublin. He substantially increased the threshold in respect of collecting arrears of residential property tax. That is evidence that he understands the problem I am discussing.
The same case applies, in a more onerous way, to persons who inherit the family home in which they live and who are faced with an impossible tax bill because of the rising price of property in Dublin. This lengthy amendment proposes to deal with that by defining the taxable value of a family home as the market value of the property reduced by 90 per cent. It would have the effect of substantially relieving from inheritance tax persons who inherit a family home.
The length of the amendment is dictated by the fact that all avenues for evasion are blocked. It is tightly focused on somebody who inherits the family home who is already living in that family home. It only applies in those circumstances. The house would have to be used as a family home.
The Minister is aware that there are sons and daughters, brothers and sisters, nephews and nieces and persons to whom the person who bequeathes the home is in loco parentis in this situation. These people find it increasingly difficult to pay the inheritance tax bill that arises as a result of a bequest.
I hope the Minister takes this issue on board. He should indicate how he intends to deal with this situation as it is causing great hardship. Nobody wants a person who has lived for 30 or 40 years in the family home to be obliged to sell it simply because they are unable to pay the tax bill. It is not like inheriting land. The person cannot sell a site or a field; either it all goes or it stays. People should not be forced out of their homes.
I do not want this provision to be spun into a relief for investment property or second houses or holiday homes. The amendment is tightly focused on the category of people who are suffering hardship. I recommend it to the Minister.