Dáil Éireann Debate, Tuesday - 22 October 2019
147. Deputy Seán Haughey asked the Minister for Finance if he will increase the threshold for inheritance tax in respect of a sibling leaving a house to another sibling; the factors to be taken into account when determining this threshold; when it was last increased; and if he will make a statement on the matter. [43215/19]
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. CAT at a rate of 33% applies on the excess over the tax free threshold.
There are, in all, three separate Group thresholds based on the relationship of the beneficiary to the disponer.
Group A threshold applies where the beneficiary is a child of the disponer. This includes adopted children, step children and some foster children.
Group B threshold applies where the beneficiary is a brother, sister, niece, nephew, or lineal ancestor or lineal descendant of the disponer.
Group C threshold applies in all other cases.
In Budget 2020, I increased the Group A threshold in which applies primarily to gifts and inheritances from parents to their children from €320,000 to €335,000.
The Group B threshold was last changed in Budget 2017, when it was increased by €2,350 to its current value of €32,500 and the Category C threshold was also increased by €1,175 to €16,250.
The options available for providing increases to CAT thresholds is normally considered in the context of available resources, must be balanced against competing demands and take into account the need to maintain the yield from CAT. In addition, all Governments have favoured changes to the Category A threshold and there has always been a significant difference between the Category A and B and C thresholds.
The Deputy will appreciate that there would be a significant cost in making substantial changes to all three thresholds. For example, the estimated cost of increasing the CAT A threshold alone from its current €335,000 to €500,000 is €74.3 million.
Increasing the B threshold by €4,500 would cost in the order of €12.7m and indeed increasing the Group B and C thresholds to bring them into line with the Group A threshold is estimated at approximately €251.9 million.
In relation to the inheritance of a property from a sibling, there is also an exemption from CAT where dwelling houses are bequeathed by individuals who live there to successors who:
- have lived there for a specified period of time before the inheritance,
- will continue to live there for a specified period of time after the inheritance, and
- who have no beneficial interest in any other residential property at the date of the inheritance.
This exemption is not dependent on the relationship between the beneficiary and the disponer.
