John Cregan (Limerick West, Fianna Fail)
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Question 370: To ask the Minister for Finance the situation in relation to a house let out by the owners in order to pay for their private nursing home fees; if such a situation would affect this person's tax situation in any way; if they would be liable for capital gains tax on the increased capital value of the house for the years it was let out; if the rental would affect the gift or inheritance tax later when sold for distribution to this person's children; the way in which their situation would be treated if the house were sold prior to death and after death; if he will provide the exemption limits for tax payable by this person's children; and if he will make a statement on the matter. [1367/05]

Brian Cowen (Laois-Offaly, Fianna Fail)
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I am advised by the Revenue Commissioners that profits arising on letting a house in the circumstances outlined will be aggregated with other income arising in the same year and chargeable to income tax. Exemption from income tax is available where total income for the year does not exceed the appropriate limits. For 2005, for a person aged 65 years and over, these are €16,500 and €33,000 for single-widowed individuals and married couples respectively. A person chargeable to income tax may claim a deduction for the cost of maintenance or treatment in an approved nursing home, by virtue of S469 TCA 1997, relief for health expenses. A list of approved nursing homes can be viewed on the Revenue website at www.revenue.ie.

Capital gains tax treatment will depend on when the property is sold. If it is sold prior to death the gain is calculated by reference to the consideration on sale and the cost on acquisition, or value at 6 April 1974 if acquired before that date. This gain is apportioned for main residence relief purposes on the basis of the period, inclusive of the final 12 months of ownership in any event, during which the property was occupied as the main residence and the overall period of ownership, or from 6 April 1974 if relevant. The period of stay in a nursing home would not be considered a period of principal private residence of the family home during the time it was rented. If the property is sold after death the gain is computed on the difference between the sale consideration and the market value at the date of death. Main residence relief does not apply to this gain.

The gift and inheritance tax free thresholds from parents to children is €466,725. No gift or inheritance tax is payable by any child unless the value of that child's gifts or inheritances received from their parents since 2 December 1991 exceeds this figure. The letting of the house prior to a gift or inheritance of the proceeds of sale of the house being received by the children does not affect the gift or inheritance position of the children. If the Deputy has a specific case in mind, he may wish to contact Revenue directly with further details for a more definitive reply.