Dáil Éireann Debate, Friday - 7 September 2018
169. Deputy Bernard J. Durkan asked the Minister for Finance the position in regard to stamp duty and tax in cases in which a parent plans to transfer the family home or part thereof to a son or daughter who has been living in the home for at least seven years; and if he will make a statement on the matter. [36771/18]
View answerI have been advised by Revenue of the position in relation to the transfer of a family home insofar as capital acquisitions tax, stamp duty and capital gains tax are concerned.
Capital acquisitions tax
Section 86 of the Capital Acquisitions Tax Consolidation Act 2003 provides for an exemption, subject to certain conditions, in relation to dwelling houses that allows for property to be inherited tax-free where the beneficiary (regardless of relationship to the deceased person) is already living in the house. Firstly, the inherited house must have been the deceased person’s principal private residence at the date of his or her death. This requirement is relaxed in situations where the deceased person had to leave the house before the date of death because of ill health; for example, to live in a nursing home. In addition, the beneficiary must not have a beneficial interest in another residential property. Finally, the beneficiary must have lived in the house for 3 years prior to the date of the inheritance and must continue to live in the house for 6 years after the date of the inheritance.
A transfer of a house for no consideration is treated as a gift. With one exception, it is not possible to receive a tax-free gift of a dwelling house. The exception is where a person gifts a dwelling house to a ‘dependent relative’. For this purpose, a dependent relative is a direct relative of the donor, or of the donor’s spouse or civil partner, who is permanently and totally incapacitated because of physical or mental infirmity from maintaining himself or herself or who is over the age of 65. If a beneficiary qualifies as a ‘dependent relative’ then there is no requirement that the house be the principal private residence of the deceased person or the donor or that the beneficiary remain in the house for 6 years after the date of the gift or inheritance.
The same treatment applies in relation to a part of a building as it does to an entire building, provided that the part of the building involved was used as a dwelling house, or was suitable for such use, and meets the qualifying conditions for the exemption in its own right: for example, a ‘granny flat’ that forms part of a house or an individual apartment in an apartment block.
Stamp duty
The transfer of a property that is a family home, or part of a family home, to a son or daughter constitutes a conveyance on sale for the purposes of the Stamp Duties Consolidation Act (SDCA) 1999. Stamp duty is payable by the transferee, whether or not it was transferred by way of sale or gift. Where a property is sold, or otherwise transferred, for less than market value, section 30 SDCA 1999 imposes a charge to stamp duty at the market value of the property.
Stamp duty on transfers of residential property is chargeable at the rate of 1% where the consideration does not exceed €1 million. Where the consideration exceeds €1 million, stamp duty is chargeable at 1% on the first €1 million and 2% on the balance in excess of €1 million.
Capital gains tax
The transfer of a family home to a son or daughter is exempt from capital gains tax if the property was the main family residence for the period of the parent’s ownership.
