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Tax Code.

Dáil Éireann Debate, Tuesday - 9 November 2004

Tuesday, 9 November 2004

Ceisteanna (129)

John Cregan

Ceist:

186 Mr. Cregan asked the Minister for Finance the reason the business of being a landlord in providing private residential accommodation is treated differently to other businesses in regard to the liability to capital gains tax when passing on property to one’s adult children; if he will report on the current situation; if he will use budget 2005 to bring equality to the system and treat the landlord profession in the same way as other businesses; if he will cover transfers when alive and dead; and if he will make a statement on the matter. [27832/04]

Amharc ar fhreagra

Freagraí scríofa

I am advised by the Revenue Commissioners that under section 599 of the Taxes Consolidation Act 1997, relief from capital gains tax applies on the transfer of "chargeable business assets" from parent to child. "Chargeable business assets" include assets used for the purpose of a trade or profession but exclude assets held as investments. The provision of private residential accommodation is not regarded as a trade or profession for tax purposes. Consequently, gains arising on the transfer, during the lifetime of the parent, of property used for that purpose are chargeable to capital gains tax.

Section 573 (2) of the Taxes Consolidation Act 1997 provides that the assets of a deceased person are not deemed to be disposed of by him or her on death. This provision ensures that assets passing from parent to child, on the death of the parent, are not subject to capital gains tax. Relief from capital acquisitions tax for all gifts and inheritances taken on or after 11 April 1994 of relevant business property was introduced in the Finance Act 1994. The relief amounts to a reduction of 90% in respect of the taxable value of relevant business property taken by the beneficiary. However, section 93(3) of the Capital Acquisitions Tax Consolidation Act 2003 specifically excludes certain types of business, including businesses which consist wholly or mainly of making or holding investments.

The letting of accommodation, whether on a long or short-term basis, is generally regarded as a business of making or holding investments and is therefore excluded from capital acquisitions tax business relief under section 93(3) of the Capital Acquisitions Tax Consolidation Act 2003. It is not the practice to comment in the lead up to the annual budget and Finance Bill on the intention or otherwise to make changes in taxation.

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