Noonan welcomes tax pledge

Family homes valued at up to £1 million would be exempt from inheritance tax if full allowance was made for the huge rise in house prices, the Dail was told.

Fine Gael's finance spokesman, Mr Michael Noonan, called on the Minister for Finance, Mr McCreevy, to increase the threshold for exemption from inheritance tax to bring it in line with recent increases in house prices.

Mr McCreevy said he was aware of the tax burden facing individuals, especially on the inheritance of the family home. The Minister reiterated his promise, given at the last budget, that he would examine the capital acquisitions tax (CAT) code in detail.

However he warned that any changes in the tax would be costly. Inheritance tax was worth £77.5 million to the exchequer in 1998. "This revenue greatly assists the Government's programme and helps achieve the ongoing goal of reducing the tax take on employment incomes."

He said that at present a child could inherit up to £192,900 from his or her parents free of CAT. A smaller threshold of £25,720 applied to other close relatives such as sisters and brothers.

He added that he wanted "to see if we can come up with a solution that alleviates the tax burden and, at the same time, is fair to all who face similar circumstances in relation to CAT on the domestic residence".

Mr Noonan welcomed the Minister's promise and asked him to give a commitment that relatives such as brothers and sisters would be looked at favourably in the review and be given the same inheritance allowance as a son or daughter.