Section 151 of the Finance Act 2000 introduced an exemption from capital acquisitions tax, CAT, for certain dwelling houses. The purpose of this exemption was to benefit individuals who had been living in a house for a period prior to taking the benefit, either by way of gift or inheritance.
The main conditions attaching to the exemption are that the beneficiary of the dwelling house must have resided in the house for a minimum of three years prior to the gift or inheritance and must not have had an interest in any other dwelling house. In addition, the recipient must continue, except where he or she is aged 55 years at the date of the gift or inheritance, or has died, to occupy that dwelling house as his-her only or main residence for a period of six years commencing on the date of the gift or inheritance. This exemption ensures that what may be the family home for many people will not be the subject of CAT when it is the subject of a gift or inheritance.
In the present case, it would appear that the nephew or niece has resided in the dwelling house for over three years and is over 55 years and, therefore, an inheritance of the dwelling house taken by the nephew or niece will be exempt from CAT once the nephew or niece had no interest in any other dwelling house.