Eoghan Murphy (Dublin South East, Fine Gael)
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62. To ask the Minister for Finance if he will include full-time carers who live with an aged parent, but who own another property, in the dwelling house exemptions, as part of the capital acquisition tax changes (details supplied). [39722/15]

Michael Noonan (Limerick City, Fine Gael)
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Capital Acquisitions Tax (CAT) is the overall title for both Gift and Inheritance Tax. The tax is charged on the amount gifted to, or inherited by, the beneficiary of the gift or inheritance.

For the purposes of CAT, the relationship between the person who provides the gift or inheritance (i.e.the disponer) and the person who receives the gift or inheritance (i.e. the beneficiary), determines the maximum life-time tax-free threshold known as the "Group threshold" below which gift or inheritance tax does not arise. There is also an annual small gifts exemption of €3,000.

The details supplied describe a situation in which two siblings have inherited a house jointly from their mother. Based on the date of death of the disponer, this means that a tax-free threshold of €225,000 applies to each inheritor. If neither of them had previously received gifts or inheritances from a parent beyond the annual small gifts amount this means that, between them, they would be entitled to receive €450,000 tax-free before the application of CAT, on the basis that neither of them is eligible for the dwelling house exemption which applies in many cases where an individual inherits the property in which they live.

The dwelling house exemption allows an individual to inherit the property in which they live free of CAT, subject to certain conditions. One of these is that the individual has no beneficial interest in another residential property. The reason for this is that the exemption is designed to prevent hardship in cases where individuals are sharing a home and where one or more individuals are bequeathed the home in circumstances where they would otherwise have to sell the property in order to pay a CAT liability and be left without a home. This situation does not arise when an inheritor also owns other residential property or properties. I have no plans to modify the requirements of the dwelling house exemption to remove this condition. The core principle that the exemption is designed to prevent hardship in the case of home sharers is not satisfied where an individual owns other residential property.

Concern is raised in the details supplied regarding the ability to pay the tax. In this regard, an inheritor of land or buildings is entitled to pay any inheritance tax due by instalments over a period of five years, subject to interest. The Revenue Commissioners also have the discretion to allow payment over a longer period, delayed payment and/or the waiving of interest in cases of genuine hardship.

As part of Budget 2016, I raised the Group A threshold applying to gifts and inheritances from parents to their children from €225,000 to €280,000. This represents an increase of about 25%. I did this in recognition of the improving state of the national finances and of the concerns expressed to me by people making and receiving gifts and inheritances, particularly in a context of rising property prices. The scale of the increase may not be considered sufficient by some but it is a significant change and as much as could be afforded at this time. I have, however, indicated that I see the change to the Group A tax- free threshold in this year's Budget as the start of a process. Provided, among other factors, that our economic recovery continues, I will examine the scope for further improvements in the tax-free thresholds in the future