Following a detailed examination of the capital acquisitions tax regime, I announced a number of reforms in the Budget of 1 December. Amongs the most significant of the measures announced is the new family home relief. This relief exempts the transfer of a home from capital acquisitions tax on or after 1 December 1999 provided it is the principal private residence of the disponer and-or the recipient and the recipient has been living in the home for the three years prior to the transfer. It will also be a condition that the recipient does not have an interest in any other residential property. These conditions will be confirmed in the Finance Bill which is to be published later this month. The Finance Bill will also provide that the recipient must own and reside in the house for the six years after the transfer. This latter condition will not apply to recipients over 55 years of age and provision will also be made for those circumstances where the recipient is unable to comply with the residence requirements for reasons outside their control e.g. due to hospitalisation or work obligations. This residence condition is a change from the budget announcement where the condition was that the recipient does not dispose of the home for six years after the transfer.
I am confident that these particular measures should remove the tax burden on the inheritance of the home for many people in the future.
In other cases where payment of inheritance tax due would cause excessive hardship for the beneficiary, the Revenue Commissioners have power to postpone, remit or compound tax due. The policy adopted by the Revenue Commissioners in such cases is to postpone the tax, and in some cases to also waive the interest due. Under the powers available, the Revenue Commissioners may permit the payment of tax over a five year period, or have the tax secured for future collection by the registration of a judgment mortgage or other charge over the property taken as a benefit.
The Revenue Commissioners have published a statement of practice detailing the steps to be taken when postponement of tax is being sought. They have confirmed that there was no noticeable increase in the number of applications received for tax deferral during 1999.
