Dáil Éireann Debate, Thursday - 2 July 2015
66. Deputy Brendan Griffin asked the Minister for Finance the recent changes in tax thresholds that have taken place or are about to take place for persons wishing to transfer property to family members; and if he will make a statement on the matter. [26765/15]
View answerCapital Acquisitions Tax (CAT) is the overall title for both Gift and Inheritance Tax. The tax is charged on the amount gifted to, or inherited by, the beneficiary of the gift or inheritance.
For the purposes of CAT, the relationship between the person who provides the gift or inheritance (i.e. the disponer) and the person who receives the gift or inheritance (i.e. the beneficiary), determines the maximum life-time tax-free threshold known as the Group threshold below which gift or inheritance tax does not arise.
There are, in all, three separate Group thresholds based on the relationship of the beneficiary to the disponer and these were last changed in Budget and Finance Act 2013 when they were reduced by 10% to their current levels with effect from 6 December 2012:
The Group A tax free threshold of €225,000, applies where the beneficiary is a child (including adopted child, stepchild and certain foster children) or minor child of a deceased child of the disponer. Parents also fall within this threshold where they take an inheritance of an absolute interest from a child.
The Group B tax free threshold of €30,150, applies where the beneficiary is a brother, sister, a nephew, a niece or lineal ancestor or lineal descendant of the disponer.
The Group C tax free threshold €15,075, applies in all other cases.
Where a person receives gifts or inheritances in excess of their relevant tax free threshold, CAT at a rate of 33% applies on the excess over the tax free threshold. It should also be noted that the thresholds apply on an individual basis so that, for example, where there are two children the current Group A threshold of €225,000 applies individually to each child in respect of gifts and inheritances from their parents.
I have said in response to a number of other recent Parliamentary Questions on this matter that I recognise that the recent growth in property values has implications for the liabilities that can arise from CAT. For this reason, I am reviewing the various aspects of this tax, including the lifetime tax-free thresholds, in the context of my preparations for Budget 2016 and the subsequent Finance Bill.
I would, however, refer the Deputy to the existence of the CAT dwelling house exemption, which allows for a property to be gifted or inherited tax free when the beneficiary is already living in the home. While certain restrictions and conditions apply to ensure its proper use, this exemption is designed to prevent cases of hardship or displacement for individuals who are home sharers and carers. In cases where the dwelling house exemption applies, the tax-free thresholds are unaffected and continue to apply separately and are available to an individual to cover the value of other gifts or inheritances which he or she may benefit from over their lifetime.
