Róisín Shortall (Dublin North West, Labour)
Link to this: Individually | In context

Question 145: To ask the Minister for Finance the arrangements that are made by the Revenue Commissioners when a person of limited means inherits the house they live in but cannot afford the inheritance tax or cannot get a mortgage to pay for it because of reasons of age, income, infirmity or other; if exemptions apply to the tax; if arrangements will be made to pay off the tax in stages, appropriate to the person's means; and the way, generally, such cases are dealt with. [20680/09]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
Link to this: Individually | In context

I am informed by the Revenue Commissioners that for the purposes of Capital Acquisitions Tax (gift and inheritance tax), the relationship between the person who provided the gift or inheritance (the disponer) and the person who received the gift or inheritance (the beneficiary) determines the maximum tax-free threshold – known as the "group threshold" – below which gift or inheritance tax does not arise.

There are, in all, three separate group tax-free thresholds based on the relationship of the beneficiary to the disponer: Group A: €434,000 – applies where the beneficiary is a child (including certain foster children) or minor child of a deceased child of the disponer. In certain circumstances parents also fall within this threshold where they take an inheritance from a child. Group B: €43,400 – applies where the beneficiary is a brother, sister, niece, nephew, or lineal ancestor or lineal descendant of the disponer. Group C: €21,700 – applies in all other cases.

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 taken into account. Apart from the tax-free group thresholds available to a beneficiary, the Capital Acquisitions Tax code also exempts a gift or inheritance of a dwelling-house completely from gift or inheritance tax in certain circumstances.

The main conditions attaching to the exemption are that the beneficiary of the dwelling-house must have resided in the dwelling-house for a minimum of three years prior to the gift or inheritance and must not have an interest in any other dwelling-house. In addition, the beneficiary must continue 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 when it is transferred. The dwelling-house exemption is available to any beneficiary who meets the conditions for the exemption irrespective of whether or not they are related to the disponer of the gift or inheritance and irrespective of the value of the dwelling-house being transferred.

The timely payment of taxes and duties by specified dates is a fundamental requirement of out tax system and is provided for in the legislation governing all taxes and duties. Under Capital Acquisitions Tax legislation, tax is normally due within four months of the person becoming entitled to the inherited or gifted property. However, a taxpayer has the option to pay the tax due and the interest accruing by five equal yearly instalments. In the case of hardship or illiquidity, the legislation also allows Revenue to consider such cases on an individual basis by reference to the facts and, where appropriate, allow for the postponement of payment for such period and on such terms as may be determined in a given case.