Róisín Shortall (Dublin North West, Labour)
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Question 164: To ask the Tánaiste and Minister for Finance further to Parliamentary Question No. 218 of 30 January 2008, if he will clarify if a person is liable for inheritance tax on a family home, if the home in question was originally passed down from father to son, and thereafter passed onto another sibling; and if the total value of all inheritance and gifts received over a period of time is calculated together. [4008/08]

Brian Cowen (Laois-Offaly, Fianna Fail)
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For the purposes of both Gift and Inheritance Tax, the relationship between the person who provided the gift or inheritance and the person who received the gift or inheritance determines the maximum tax-free threshold — known as the "Group threshold" below which gift or inheritance tax does not arise. The details of these thresholds were set out in my earlier response.

When calculating whether a beneficiary has received benefits in excess of his or her Group tax-free threshold, any other gifts and inheritances received by that beneficiary since 5 December 1991 from within the same Group are also taken into account. If the total value of all gifts and inheritances received since this date is above the relevant Group threshold, then a 20% rate of gift/inheritance tax applies on the excess over the threshold figure.

Therefore, when the family home was passed down from father to son, the son would not be liable to Inheritance Tax on the inheritance he received from his father if the market value of the family home, when added to the value of any other assets inherited from his father or gifts received from him, were below the Group A tax-free threshold for the year in question in which the son received the inheritance.

If, subsequently, the home was then passed on by the son to one of his siblings by way of inheritance or gift, the sibling would be entitled to the Group B tax-free threshold, which applies to gifts and inheritances between siblings, in respect of that separate inheritance received by the sibling.

The inheritance taken by the son from his father and the inheritance later taken by the sibling from their brother are two separate inheritances and are taxed separately, with each beneficiary being entitled to their own Group tax-free threshold depending on their relationship to the individual disponer from whom they are receiving their inheritance.

Apart from the tax-free Group thresholds available to a beneficiary, the Capital Acquisitions Tax code exempts certain gifts and inheritances completely from tax and also contains relieving provisions. As it appears that the Deputy has a specific case in mind, she may wish to contact the Revenue Commissioners who will be in a position to advise on the tax implications.