Róisín Shortall (Dublin North West, Social Democrats)
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317. To ask the Minister for Finance the steps he is taking to address the difficulties facing co-habiting couples who jointly own a property and who then must pay inheritance tax on their family home when one of them passes away; the right of co-habiting couples to apply to the Revenue Commissioners for a certificate to grant the same tax rights as married couples; and if he will make a statement on the matter. [39853/21]

Paschal Donohoe (Dublin Central, Fine Gael)
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I am advised by Revenue that, for the purposes of Capital Acquisitions Tax (“CAT”), the relationship between the person who provides a gift or inheritance (“the disponer”) and the person who receives the gift or inheritance determines the lifetime tax-free threshold (“Group Threshold”) below which CAT does not arise. Any prior gift or inheritance received by a person since 5 December 1991 from within the same Group Threshold is aggregated for the purposes of determining whether any CAT is payable on a benefit. Where a person receives gifts or inheritances that are in excess of the relevant Group Threshold, CAT at a rate of 33% applies on the excess benefit. In the case of a cohabitant who is not related to the disponer, the relevant Group Threshold is the Group C threshold, which is currently €16,250.

Where a cohabitant inherits the family home from their deceased partner, they may be in a position to avail of the dwelling house exemption. To qualify for the exemption, the inherited house must have been the deceased cohabitant’s principal private residence at the date of their 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. The inheriting cohabitant must also 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 that date.

In addition to the dwelling house exemption, certain transfers of property between qualified cohabitants within the meaning of Part 15 of the Civil Partnership and Certain Rights and Obligations of Cohabitants (CPCROC) Act 2010 are exempt from CAT. Part 15 provides for a redress scheme where court orders can be obtained in certain circumstances in relation to the transfer of property. This applies to “qualified cohabitants”, i.e. 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 prior to the end of the relationship.

In relation to the Deputy’s reference to the right of cohabiting couples to apply to Revenue for a certificate granting them the same tax rights as married couples, it is important to note that differences in the tax treatment of the different categories of couples arise from the objective of dealing with different circumstances while also respecting the constitutional requirement to protect the institution of marriage. Cohabitants do not have the same legal rights and obligations as a married couple or couple in a civil partnership which is why they are not accorded similar tax treatment to couples who have a civil status that is recognised in law. Any change in the tax treatment of cohabiting couples can only be addressed in the broader context of future social and legal policy development in relation to such couples. As such, there is no statutory basis on which Revenue could issue the type of certificate the Deputy has referred to.

Further information on the taxation of cohabiting couples can be found on the Revenue website, available at www.revenue.ie/en/life-events-and-personal-circumstances/marital-status/cohabiting-couples/index.aspx.