Richard Bruton (Dublin North Central, Fine Gael)
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Question 208: To ask the Minister for Finance if he is satisfied that the present thresholds that apply under capital acquisitions tax for transfer to persons who are not sons or daughters of deceased persons are set at a realistic level in view of the fact that the present market value of an average house represents over six times the threshold for transfer to a brother or sister and over 12 times the threshold for the transfer to a person who is unrelated; his estimate of the cost of doubling these two thresholds; and if he will make a statement on the matter. [29620/05]

Brian Cowen (Laois-Offaly, Fianna Fail)
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For the purpose of capital acquisitions tax, CAT, the relationship between the person who provided a gift or inheritance, the disponer, and the person who received a gift or inheritance, the beneficiary, determines the maximum tax free threshold, known as the group threshold. There are three group thresholds based on the relationship of the beneficiary to the disponer and these thresholds are indexed annually by reference to the consumer price index.

The 2005 group thresholds applying to a gift or inheritance for the categories referred to by the Deputy are as follows: group B threshold, to a parent, brother, sister, niece, nephew or grandchild, is €46,673; group C threshold, to a relationship other than a son or daughter or those outlined in group B, is €23,336.

I am informed by the Revenue Commissioners that the cost of doubling these two thresholds would be €132.9 million and €45.22 million respectively. This equates to a very large proportion of the annual tax yield from CAT.

The Finance Act 2000 introduced an exemption from CAT for the recipient of a dwelling-house where the dwelling-house is taken by way of a gift or inheritance provided certain conditions are satisfied. Essentially, CAT no longer applies in respect of a gift or inheritance of a dwelling-house taken on or after 1 December 1999, provided the recipient of the gift or inheritance had been living in the house for three years prior to the gift or inheritance and does not have an interest in any other residential property. Also, the recipient must continue, except where he or she is aged 55 years at the date of the gift or inheritance, to occupy that dwelling house as his or her only or main residence for a period of six years from the date of the gift or inheritance. This exemption ensures that what may be the family home for many people will not be the subject of gift or inheritance tax where the conditions for this relief are met.