Peter Fitzpatrick (Louth, Fine Gael)
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160. To ask the Minister for Finance if he will consider delaying the proposed new treatment of dwelling house relief from capital acquisitions tax, CAT, to 1 November 2019 to allow those persons that have already put arrangements in place under the old system not be penalised; and if he will make a statement on the matter. [39545/16]

Michael Noonan (Limerick City, Fine Gael)
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The Finance Bill 2016 has been passed by Dáil Éireann and is currently being considered by the Seanad. In Section 52 of the Bill, I have provided for an amendment to section 86 of the Capital Acquisitions Tax Consolidation Act 2003, the section that provides an exemption from capital acquisitions tax on the inheritance or gift of a dwelling house in certain circumstances. I consider that this particular relief has lost focus since its introduction because of changes made to how it operates over the years. The purpose of my amendment is to realign the exemption with its original policy objective i.e. to alleviate the hardship of an inheritance tax liability for a person who inherited a house in which he or she had been living with the deceased and to ensure that the person did not have to sell the house to pay the tax liability. The changes I have proposed will have two principal effects.

Firstly, the dwelling house exemption will only be available for inheritances. With one exception, it will no longer be possible to receive a tax-free gift of a dwelling house. The exception will be where a person gifts a dwelling house to a dependent relative. For this purpose, a dependent relative is a direct relative of the donor, or of the donor's spouse or civil partner, who is permanently and totally incapacitated because of physical or mental infirmity from maintaining himself or herself or who is over the age of 65.

Secondly, the inherited dwelling house must have been the deceased person's principal private residence at the date of his or her death. This requirement will be relaxed in situations where the deceased person had to leave the house before the date of death because of ill health; for example, to live in a nursing home.

If my amendment is accepted by the Oireachtas and enacted in the Finance Bill, it will take effect from the date of enactment. There will not be any provision for transitional arrangements for those people who may have already acquired a dwelling house for another person to live in with the intention of making a gift of the house to that person when the required three-year period of occupation comes to an end. As the provision was intended to alleviate hardship it is not my intention to delay the introduction of the new arrangements to facilitate individuals who intended to make use of the previous arrangements to avoid tax.