Michael McGrath (Cork South Central, Fianna Fail)
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149. To ask the Minister for Finance if he is considering anti-avoidance measures relating to the potential misuse of the dwelling house exemption; and if he will make a statement on the matter. [14221/16]

Michael Noonan (Limerick City, Fine Gael)
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The dwelling house exemption is a provision of the capital acquisitions tax (CAT) legislation. It allows for the tax-free transfer by way of gift or inheritance of the residential property in which a beneficiary lives, subject to certain conditions. These conditions include a requirement that the beneficiary has been living in the property for three years prior to receiving it and that they remain living in the property for six years afterwards, except in certain special circumstances. It is also a condition of the relief that the beneficiary not be beneficially entitled to any other residential property at the time of the transfer.

The underlying purpose of the relief, which I consider to be reasonable, is to prevent so far as possible cases of hardship arising from a tax perspective when a person is gifted or inherits what is, in effect, their home. My Department and the Revenue Commissioners have encountered some evidence that individuals may be using the relief as a way of passing on wealth tax-free in a manner which is not in line with the core aim of the relief.

My Department and the Revenue Commissioners are currently working to gather and assess information relating to such possible practices and to consider whether the current scope of the relief is in line with its original spirit. The work of investigating this issue and developing potential policy responses is current and ongoing.