INHERITANCE TAX/GIFT TAX
WHAT IS CAPITAL ACQUISITION TAX?
Capital Acquisition Tax (CAT) is a tax that may be payable on a gift or inheritance.
WHAT DOES CAPITAL ACQUISITION TAX APPLY TO?
CAT applies to all property which is located in the Republic of Ireland. This includes real property such as land and house and personal property such as money, shares, furniture and effects. It also applies where the property is not located in Ireland but either the donor or the donee of the property are resident or ordinarily resident in Ireland.
DOES EVERYBODY HAVE TO PAY CAT?
No. Where property passes between spouses or civil partners there is no liability to CAT.
Furthermore, depending upon the relationship between the donor and donee, there is a tax free threshold that applies before tax becomes payable.
WHAT ARE THE THRESHOLDS FOR CAT?
There are three different group thresholds; Group A, Group B and Group C.
Group A Threshold applies where the person receiving the gift or inheritance is the child of the donor. Included in this group are adopted children, step children and in certain cases foster children. Also included in this group in certain cases are inheritances by a parent from a child and inheritances by a minor child of a deceased child of a donor.
Currently the group A Threshold is €310,000.
Group B Threshold applies where the person receiving the inheritance or gift has a family relationship with the donor such as brother, sister, nephew, niece, grandparent, grandchild.
Currently the Group B Threshold is €32,500
Group C Threshold applies where the donee does not fall into either Group A or Group B.
Currently the Group C Threshold is €16,250.
WHAT IS THE RATE OF TAX?
Currently the rate of CAT is 33%.
ARE THERE ANY EXEMPTIONS TO CAT?
Yes. There are certain exemptions such as the small gift exemption and the dwelling house exemption.
SMALL GIFT EXEMPTIONS
The small gift exemption is €3,000 per annum. A donee can receive €3,000 per annum from any number of people without incurring a liability to CAT.
DWELLING HOUSE EXEMPTION
Since 25th December 2016 an exemption from CAT applies if a donee inherits a house and meets the following criteria:
The house was the only or main home of the donor.
The donee lived in the house as his/her main house for three years prior to the donor's death.
The donee does not own, have an interest or share in any other house including one he/she acquired as part of the same inheritance.
The house is the donee's main home for six years after receiving the inheritance. This does not apply if the donee is over 65.
If you receive a gift of a house since 25th December 2016 a donee is exempt from CAT
if the donee is a dependent relative of the donor because the donee is permanently and totally incapacitated due to a physical or intellectual disability and is unable to earn a living.
The donee is 65 years or older at the date of the gift and
The conditons 1. to 4. above are satisfied.
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