Tax Exemption for Dwelling House - CAT 10

DamoRed

Even though this may have a tax implication, my gut feeling is that it's a more of a legal issue, as the tax would only be applicable in particular circumstances. If not, please feel free to move it to the relevant section. If, however it's deemed to be too specific and comes under 'legal advice' then my apologies in advance, but I hope this is not so and that it's a case of 'Yes, it's covered/ No, it's not covered'. Either way, further along, I will be requiring legal assistance, but this is just a quick enquiry to try ease a worry.

OK, the basic situation is as follows...

Sole remaining parent dies without a will. Eight middle age to elderly siblings, three of whom share the family home. The other five, with their own respective families and homes, wish to relinquish their 1/8 share in favour of three living in family home.

In ordinary circumstances, the gift of the other 5 shares would take each of shared recipients over the threshold for CAT. But as it's the family home and the remaining three have been resident for the duration of their lives, does the Tax Exemption for Dwelling House Cat 10 apply?



The guidelines are as below, but it appears to be on the premise that the 'gift' of the house is from the actual owner of the house at the time of the gift, to another, whether sibling or other relation.

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Section 86 of the Capital Acquisitions Tax Consolidation Act 2003 provides that gifts or inheritances of a dwelling- house taken on or after 1 December 1999 will be exempt from capital acquisitions tax provided the following conditions are complied with -

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. Where the dwelling- house has directly/indirectly replaced other property owned by the disponer, this condition may be satisfied where the recipient has continuously occupied both properties as his/her only/main residence for a total period of 3 out of the 4 years immediately prior to the date of the gift/inheritance.

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 Revenue's view is that a dwelling-house means a building or part of a building being used or which is suitable for use as a dwelling.
Gifts taken on or after 20 February 2007: Any period during which a donee occupies a house that was during that period the disponer's only or main residence will be disregarded as a period of occupation in that house unless the disponer is compelled, by reason of old age or infirmity, to depend on the services of the donee for that period. Old age refers to a person aged 65 or over.

Gifts taken on or after 20 February 2007: The house must be owned by the disponer during the 3 year period prior to the gift and, where the gifted house has replaced another property, each house must be owned by the disponer for the relevant part of the 3 year period that it was occupied by the beneficiary.
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.

The exemption will not be withdrawn where a breach of the condition referred to at e) above is as a result of the recipient requiring long term medical care in a hospital, nursing home or convalescent home or as a result of a condition being imposed by an employer on a recipient to reside elsewhere.

Marcusm

If you decide to post in the Taxation forum, you'll need to change the post to remove the reference to property.

You will need to have a solicitor deal with the reregister action and disclaimers of inheritance. However, the net answer SHOULD be that if the non resident children disclaim their inheritance, the resident children will be treated as receiving a greater inheritance from the recently deceased parent and then I would expect the relief to be available.

The following link will be of assistance to you in relation to disclaimers. In see no reason why it should not apply to intestacy situations but remember - get professional advice.

http://www.revenue.ie/en/tax/cat/guide/disclaimer.html