Christopher O'Sullivan (Cork South West, Fianna Fail)
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160. To ask the Minister for Finance his plans to review the current position relating to the payment of capital acquisitions tax by unmarried cohabitants both in relation to a shared primary residence home and other assets; and if he will make a statement on the matter. [34976/21]

Paschal Donohoe (Dublin Central, Fine Gael)
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At the outset, I wish to acknowledge that the issue of the payment of Capital Acquisitions Tax (CAT) by unmarried cohabitants both in relation to a shared primary residence home and other assets is a complex issue.

The starting point for considering this matter is that cohabitants do not have the same legal rights and obligations as a married couple or couple in a civil partnership. Under the law, couples who have obtained legal recognition of their relationship status through marriage or civil partnership are not in an analogous situation to other cohabiting couples, which is why they are not accorded similar tax treatment to couples who have a civil status that is recognised in law.

Therefore, any change in the tax treatment of cohabiting couples cannot be considered in isolation, solely in respect of Capital Acquisitions Tax. There are implications, for example, for income tax and social welfare treatment also. For this reason, this can be considered only in the broader context of future social and legal policy development in relation to such couples.

However, the above said there are a number of reliefs for cohabitants under CAT. For instance, cohabiting individuals can avail of the ‘dwelling house exemption’ to bequeath their principal private residence, generally the most substantial asset owned by an individual, free from inheritance tax. To qualify for the exemption, the inherited house must have been the deceased cohabitant’s principal private residence at the date of his or her death. This requirement is 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 in a nursing home. In addition, the inheriting cohabitant must not have a beneficial interest in another residential property. Finally, the inheriting cohabitant must have lived in the house for 3 years prior to the date of the inheritance and must continue to live in the house for 6 years after the date of the inheritance.

Agricultural property and relevant business property can also be gifted or bequeathed between cohabitants with a significant 90% reduction in their taxable values under the agricultural relief and business relief schemes where the relevant conditions are met. The dwelling house exemption, agricultural relief and business relief are available irrespective of the relationship between the individuals concerned and apply equally to married couples, civil partners, cohabitants, siblings or any other form of relationship.

Section 88A of the Capital Acquisitions Tax Consolidation Act 2003 exempts transfers of property, made under a court order, between qualified cohabitants within the meaning of Part 15 of the Civil Partnership and Certain Rights and Obligations of Cohabitants (CPCROC) Act 2010. The CPROC Act defines “qualified cohabitants” as persons who have been in a committed and loving relationship with another person for a minimum period of 5 years (2 years where they are parents of one or more dependent children), whose relationship has ended due to death or separation and neither of whom was married to and living with another person in 4 of the 5 years immediately before the end of the relationship.