Dwelling house exemption change for Capital Acquisitions Tax (CAT)

The changes to the dwelling house exemption from CAT which came into effect on or after 25 December 2016, mean the exemption will now only apply to inheritances and not gifts unless the house is gifted to a dependent relative.  Also the inherited property must have been the principal place of residence of the deceased person at the date of death subject to some exceptions.

New rules

The exemption will apply only to people inheriting homes, with only one exception. Gifting shall be possible only for relatives and then only if they are permanently or totally incapacitated from providing for themselves by virtue of a physical or mental infirmity, or else if they are older than 65 years of age.

In the case of inheritance, the exemption will apply only to the donor’s main home – or principal private residence. Until now a person could buy a home in which their child would live independently and then inherit it tax-free on their parent’s death.

The person inheriting will have to have lived with the person giving them the home for at least three years before they inherit and, as before, stay in the property for six years thereafter.

A previous relief ending that provision at the age of 55 has now been risen to 65.


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