Capital Acquisitions Tax (CAT)

Legislation provides that gifts or inheritances of a dwelling- house taken on or after 1 December 1999 will be exempt from capital acquisitions tax provided certain conditions are met. For the purpose of this legislation, a ‘Dwelling house’ means a building, part of a building or the "appropriate part" of a building suitable for use as a dwelling and an adjoining area ("curtilage") of up to one acre.

The recipient must have occupied the dwelling- house continuously as his/her only/main residence for a period of 3 years immediately prior to the date of the gift/inheritance. This condition would appear to be met in your case.

The recipient must not, at the date of the gift/inheritance, be beneficially entitled to any other dwelling- house or to any interest in any other dwelling- house. The house must also be owned by the disponer during the 3 year period prior to the gift. The disponer is the individual from whom you have received the gift or inheritance. You must consider carefully whether these conditions have been met in this instance.

It is also important to note, that the recipient must continue, except where such recipient was aged 55 years or more at the date of the gift or inheritance or has died, to occupy that dwelling- house as his/her only/main residence for a period of 6 years commencing on the date of the gift/inheritance. Where the dwelling- house is directly/indirectly replaced by other property, this condition may be satisfied where the recipient continuously occupied both properties as his/her only/main residence for a total period of 6 out of 7 years commencing on the date of the gift/inheritance. A recipient absent during any time through working abroad is considered to remain in continuous occupation of that dwelling house.

Should the exemption outlined in Section 86 apply, then as well as being exempt from CAT, the benefit will not be taken into account in computing CAT payable on any other benefits taken by the beneficiary.

If you are uncertain as to whether this exemption will apply in this instance, please do not hesitate to contact RDA Accountants’ Tax manager George Skelton CTA, ACA, MBA at our Wexford office for further assistance.