Capital Acquisitions Tax

There has been much talk in recent weeks on Ireland’s inheritance tax regime – with a US ‘Think Tank’ suggesting Ireland has one of the most severe inheritance tax regimes in the western world. According to The Irish Independent, Finance Minister Michael Noonan is currently “conducting a review surrounding the inheritance tax trap, which is forcing many people to sell their parents' homes to settle their tax bills with the Revenue Commissioners”.

Irish inheritance tax falls under the tax category Capital Acquisitions Tax (CAT) which covers both inheritances and gifts and is charged at a penal 33%.

Under the current tax regime in Ireland it is the relationship between the beneficiary and the gift/inheritance giver that dictates when a person becomes liable for CAT. At the moment, before a person becomes liable for CAT, they may inherit/receive gifts (or if more than one, then the total when aggregated together) in their lifetime from the following classes, up to the following values:

Group Relationship to Disponer Group Threshold from 6/12/2012

A Son/Daughter €225,000

B Parent*/Brother/Sister/Niece/Nephew/Grandchild €30,150

C Relationship other than Group A or B €15,075

*In certain circumstances a parent taking an inheritance from a child can qualify for Group A threshold.

Many commentators suggest these thresholds may be increased in October’s Budget.

Some reliefs and exemptions are available. Significantly, in cases which involve the gift/inheritance of a dwellinghouse, a full exemption can apply if certain criteria are met.

For more information contact Julie Mullan

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