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Tax Code

Dáil Éireann Debate, Thursday - 7 June 2012

Thursday, 7 June 2012

Ceisteanna (52)

Brendan Griffin

Ceist:

51 Deputy Brendan Griffin asked the Minister for Finance if 90% relief will be made applicable to sons and daughters inheriting property from parents who were making their sole living as landlords; and if he will make a statement on the matter. [27569/12]

Amharc ar fhreagra

Freagraí scríofa

I am informed by the Revenue Commissioners that for the purposes of Capital Acquisitions Tax (Gift and Inheritance Tax), the relationship between the person who provided the gift or inheritance (the disponer) and the person who received the gift or inheritance (the beneficiary) determines the maximum tax-free threshold, known as the Group threshold, below which gift or inheritance tax does not arise. There are three separate Group tax-free thresholds based on the relationship of the beneficiary to the disponer. For gifts and inheritances from parents to children, which is the subject of the Deputy's question, the threshold is €250,000.

When calculating whether a beneficiary has received benefits in excess of his or her group tax-free threshold, any other gifts and inheritances received by that beneficiary since 5 December 1991 from within the same group are also taken into account.

If the total value of all inheritances and gifts received by the beneficiary since this date from within the same group exceeds the group tax-free threshold, a 30% rate of Capital Acquisitions Tax will apply on the difference.

Apart from the group tax-free thresholds available to a beneficiary, the Capital Acquisitions Tax code contains significant reliefs and exemptions such as the Dwelling House Exemption, Business Relief and Agricultural Relief.

Where a gift or inheritance consists of business property, the value of the business may be reduced by 90% provided certain conditions are met.

Business property relief applies only to trading activities. Businesses consisting of the owning and letting of properties are excluded from business relief because the rental earning aspect is an investment activity rather than a trading activity. Investment activities are specifically excluded from business relief.

Therefore, the position is that children inheriting property from parents, who were making their sole living as landlords, would not be in a position to reduce the value of those properties by 90% for the purposes of calculating Capital Acquisitions Tax. They can claim the Group A tax-free threshold of €250,000 and may be able to claim other reliefs, depending on their circumstances.

I have no plans to extend CAT business property relief to cover investment properties.

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