Billy Timmins (Wicklow, Fine Gael)
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Question 131: To ask the Tánaiste and Minister for Finance the position in regard to the case of a person (details supplied); if there are exceptions for people in this position; and if he will make a statement on the matter. [14577/08]

Brian Cowen (Laois-Offaly, Fianna Fail)
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I am advised by the Revenue Commissioners that for the purposes of both Gift and Inheritance Tax, the relationship between the person who provided the gift or inheritance (i.e. the disponer) and the person who received the gift or inheritance (i.e. the beneficiary), determines the maximum tax-free threshold — known as the "Group threshold". Three Group thresholds were introduced on 1 December 1999, based on the relationship of the beneficiary to the disponer, and these Group thresholds are indexed annually by reference to the Consumer Price Index. The indexed Group threshold applying to a gift or inheritance received by a person from their brother is the Group B threshold and this Group B threshold is €52,121 for 2008.

Any other gifts and inheritances that might have been received by the beneficiary from within the same Group B threshold (i.e. from brothers, sisters, uncles, aunts or grandparents) since 5 December 1991 will also be taken into account when applying the threshold for the purposes of calculating tax due on any inheritance/gift from a person within that threshold. If the total value of all gifts and inheritances received by the beneficiary since this date from within the same Group does not exceed the Group threshold, no Gift or Inheritance Tax will apply. If the Group threshold figure is exceeded, then a 20% rate of tax will apply only on the excess over the threshold figure.

In the case in question, if the beneficiary did not receive any gifts and inheritances since 5 December 1991 from within Group B threshold (i.e. brothers, sisters etc.) then inheritance tax at the rate of 20% will apply on €97,879 on the market value of the home of €150,000 less the tax- free Group B threshold of €52,121 for 2008. If, however, the beneficiary did receive gifts/inheritances since 5 December 1991, their value will have to be taken into account and the tax free Group threshold will be reduced accordingly. The legislation provides for payment of any tax due on an inheritance/gift in 5 equal yearly instalments, it also provides for situations of hardship or illiquidity and such instances may be dealt with by postponement of payment in certain cases.

Apart from the tax-free Group threshold available to a beneficiary, the Capital Acquisitions Tax code (Gift and Inheritance Tax) exempts certain gifts and inheritances completely from tax and also contains relieving provisions. For example, a gift or inheritance of a dwelling-house is exempt from gift or inheritance tax in certain circumstances. If a beneficiary receives an inheritance of a dwelling-house, the inheritance of that house will be exempt from inheritance tax if the beneficiary has resided in the house for a minimum of 3 years prior to the inheritance and if the beneficiary has no interest in any other dwelling-house. This exemption ensures that what may be the family home for many people will not be the subject of any gift or inheritance tax when it is the subject of a gift or inheritance. Given that the overall position in relation to inheritances can be complicated, it would be advisable for the individual in this case to contact his local office of the Revenue Commissioners so that his position can be fully considered.