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Tax Code

Dáil Éireann Debate, Thursday - 28 January 2016

Thursday, 28 January 2016

Ceisteanna (83)

Michael McGrath


83. Deputy Michael McGrath asked the Minister for Finance if he has examined the feasibility of having a specific inheritance tax allowance for the family home; the cost of introducing a €500,000 threshold in respect of the inheritance of family homes; and if he will make a statement on the matter. [3587/16]

Amharc ar fhreagra

Freagraí scríofa (Ceist ar Finance)

I have no plans to introduce a specific allowance for capital acquisitions tax (CAT) purposes in respect of the inheritance of the family home. It is already the case that an individual or individuals who are gifted or inherit the residence which is their home can, subject to conditions, be completely exempt from CAT in respect of that gift or inheritance. Otherwise, the values of assets transferred, including residential properties, are subject to relief from CAT by reference to a number of life-time tax-free thresholds based on the nature of the relationship between the disponer and the beneficiary and below which CAT does not arise.

Broadly, the Group A threshold deals with transfers between parents and their children and  currently stands at €280,000, having been increased by me in Budget 2016 from a previous level of €225,000. It is within this category that I would expect that many of the transfers of what is generally being referred to as the family home would arise. The Group B threshold is €30,150 and deals broadly with transfers between other relatives while the Group C threshold deals with transfers in other cases and stands at €15,075. The values of gifts or inheritances received above the various thresholds are subject to CAT at the rate of 33%.

I have already indicated that I see the change to the Group A tax- free threshold in this year's Budget as the start of a process. Provided, among other factors, that our economic recovery continues, I would intend to examine the scope for further improvements in the tax-free thresholds in the future.

As regards the cost of a specific tax-free threshold for CAT purposes in respect of the family home, I am informed by the Revenue Commissioners that there is no reliable basis on which to provide such a costing using the data available as no distinction is made between a family home and a non-principal private residence in CAT returns. I have been previously informed by Revenue, however, that a further increase in the Group A tax-free threshold to €500,000 would cost about €74 million in a full year.