Nearly 4,000 avail of little-known tax exemption

Some 3,698 people have availed of a little-known exemption on inheritance tax over the past seven years, according to figures from the Revenue Commissioners.

This emerged in a written answer by the Minister for Finance Michael Noonan to a question from Fianna Fáil's finance spokesman Michael McGrath.

Mr Noonan provided data from 2008 up to 2014 for the dwelling house exemption from capital acquisitions tax (CAT). It showed that 616 people were granted the exemption in 2014, the highest number over the period.

Some 541 benefitted in 2013 and 501 in 2012. Figures show that 566 people claimed the exemption in 2011, which was up significantly on the 440 who received it the previous year. In 2009, the number was 574, up from 460 in 2008.

New threshold

Speculation is mounting that a new threshold for inheritance tax that would apply only to family homes could be included in the budget on October 13th.

The Irish Times

reported last month that the threshold could be set as high as €500,000 – the current threshold of €225,000 applies to all assets.

However, there is an existing exemption that potentially allows parents to gift properties to their children without having to pay CAT.

Section 86 of the Capital Acquisitions Tax Consolidation Act 2003 provides that gifts or inheritances of a dwelling-house are exempt from CAT provided certain conditions are met.

The recipient must have occupied the house continuously as their only or main residence for a period of three years immediately before the gift or inheritance.

The recipient must not be entitled to any other house or to an interest in any other residential property.

The donor, typically a parent, cannot have lived in the property during this period unless they are compelled by old age (65 or older) or infirmity to depend on the services of the child.

In addition, the recipient must continue, except if they are 55 or more at the date of the gift or inheritance, to occupy that house as their main residence for a period of six years from the date of the bequest.