Michael Healy-Rae
Question:176. Deputy Michael Healy-Rae asked the Minister for Finance to address a query (details supplied); and if he will make a statement on the matter. [36924/22]
View answerThursday, 7 July 2022
Questions (176)
Written answers
I am informed by Revenue that for Capital Acquisitions Tax (CAT) purposes, the relationship between the deceased person (i.e. the disponer) and the person who receives the gift or inheritance (i.e. the beneficiary) determines the maximum amount, known as the “Group threshold”, below which CAT does not arise. The Group A threshold (currently €335,000) applies, inter alia, where the beneficiary is a child (including adopted child, stepchild and certain foster children) of the disponer.
A foster child is treated as a child of the disponer and can avail of the Group A threshold in the following circumstances:
- in respect of a gift or an inheritance from a foster parent with whom he or she has lived, and who has cared for and maintained the child at his or her own expense, for a cumulative period of at least 5 years before the child’s 18th birthday, or
- in respect of an inheritance from a foster parent where, prior to the inheritance, the child had been placed in the care of the foster parent under the Child Care (Placement of Children in Foster Care) Regulations 1995, or the Child Care (Placement of Children with Relatives) Regulations 1995.
Therefore, the current position is that certain children in either informal long-term foster care arrangements or formal foster care arrangements can avail of the Group A tax-free threshold on inheritances from a foster parent. Where a foster child who is the subject of an informal long-term arrangement avails of the Group A threshold, there is a requirement that a minimum of two witnesses can attest to the bona fides of the arrangement.
It is worth noting that a person can bequeath their principal private residence, generally the most substantial asset held by an individual, free from tax under the dwelling house exemption which allows for property to be inherited tax free where the inheritor is already living in the home, irrespective of the person’s relationship to the inheritor, subject to certain conditions.
Information is also available on the Revenue website at the link www.revenue.ie/en/gains-gifts-and-inheritance/cat-reliefs/foster-child-relief/index.aspx.