Dáil Éireann Debate, Tuesday - 27 July 2021
315. Deputy Dara Calleary asked the Minister for Finance the provisions or options that exist for a sibling who was also primary carer in circumstances (details supplied); and if he will make a statement on the matter. [39814/21]
View answerI am advised by Revenue that, for the purposes of Capital Acquisitions Tax (“CAT”), the relationship between the person who provides a gift or inheritance (the disponer) and the person who receives it (the beneficiary) determines the lifetime tax-free threshold (“Group Threshold”) below which CAT does not arise. There are three separate Group thresholds based on the relationship of the beneficiary to the disponer. The Group A threshold (currently €335,000) applies, inter alia, where the beneficiary is a child of the disponer. The Group B threshold (currently €32,500) applies where the beneficiary is a brother, sister, nephew, niece or lineal ancestor or lineal descendant of the disponer. The Group C threshold (currently €16,250) applies in all other cases. Any prior gift or inheritance received by a beneficiary since 5 December 1991 from within the same Group Threshold is aggregated and added to the current benefit for the purposes of determining whether any tax is payable on a benefit. Where a person receives gifts or inheritances that are in excess of the relevant tax-free threshold, CAT at a rate of 33% applies on the excess benefit.
Each benefit received must be considered in the context of the relevant Group Threshold that applies at the time that the benefit is received and whether any reliefs or exemptions apply.
Siblings may gift or bequeath property to each other free from CAT where the value of the property does not exceed the Group B Threshold (€32,500), taking into account previous gifts and bequests to the beneficiary within that threshold.
There are no specific reliefs or exemptions available where the beneficiary of a gift or inheritance is a carer. However, where the inherited benefit is a residential property, the beneficiary may be able to avail of the dwelling house exemption. To qualify for this exemption, the inherited property must have been the disponer’s principal private residence at the date of their death. This requirement is relaxed in situations where the disponer had to leave the property before the date of death because of ill health; for example, to live in in a nursing home. In addition, the beneficiary must not have a beneficial interest in any other residential property. The beneficiary must also have lived in the property for 3 years prior to the date of the inheritance and must continue to live in the house for 6 years after that date. Where the exemption is available, the beneficiary will inherit the property free from CAT, irrespective of its value. Further information regarding the dwelling house exemption is available on Revenue’s website at www.revenue.ie/en/gains-gifts-and-inheritance/cat-reliefs/index.aspx.
Details of other reliefs and exemptions which may be available to the beneficiary can be found on Revenue’s website at www.revenue.ie/en/gains-gifts-and-inheritance/cat-reliefs/index.aspx and www.revenue.ie/en/gains-gifts-and-inheritance/cat-exemptions/index.aspx.
I understand that the beneficiary in this case inherited a house from her sibling. As an amount of CAT was paid, it appears that the beneficiary did not meet the qualifying conditions for the dwelling house exemption at the time of the inheritance. While the details supplied indicate that a further benefit of a cash sum has also been inherited by the same beneficiary, it is unclear who the disponer is in relation to the cash sum. If this benefit was bequeathed by the same disponer, or indeed another disponer within the Group B Threshold, then the beneficiary could be liable to CAT on that cash benefit. If the relationship of the beneficiary to the disponer is such that a different Group Threshold applies, then the beneficiary will need to determine their CAT liability in the usual way. As there is insufficient information to be definitive, the beneficiary may, if they wish to have certainty in this matter, provide full details of their case to Revenue or seek independent professional advice.
