I am advised by Revenue that both gifts and inheritances of a dwelling-house can qualify for an exemption from the payment of Capital Acquisitions Tax (CAT), known as the "Dwelling House Exemption" where certain conditions are satisfied. Section 86 of the Capital Acquisitions Tax Consolidation Act (CATCA) 2003 provides for this exemption.
One of the qualifying conditions for the Dwelling House Exemption is that the person receiving the gift or inheritance (i.e. the beneficiary) must have continuously occupied the house as his or her only or main residence for a period of three years immediately prior to the date of the gift or inheritance. Following changes to the relief made by the Finance Act 2007, gifts and inheritances of a dwelling house are treated differently in relation to this 3-year occupancy requirement. In the case of an inheritance, any period in which the disponer occupied the dwelling- house along with the beneficiary counts towards the beneficiary's required 3-year period of occupation. In the case of a gift, however, any such period of co-habitation does not count towards the required 3-year period of occupation, unless the co-habitation is required as a result of the disponer's old age or infirmity. As indicated by the Deputy, Section 86 of the CATCA 2003 does not provide for other exceptions such as where a disabled child requires the support of his or her parents.
This does not mean that the Dwelling House Exemption is not available in any case where a disabled child shares a house with his or her parents. As I have already indicated, the ability of a disabled child to receive a tax-free gift of a house is restricted, but there is no restriction on his or her ability to avail of the exemption on the inheritance of the house.
