Finance Act 2016 introduced measures that significantly restrict the availability of Dwelling House Relief (s. 86 CATCA 2003).
Under the new Dwelling House Relief legislation:
Relief will not generally be available for gifts of a dwelling house, or gifts which convert to inheritances due to the death of the person making the gift within 2 years of the date of the gift. This proposed provision represents a significant restriction of the relief and could lead to unforeseen capital acquisitions tax liabilities for people who receive a gift of a house.
Dwelling House Relief will however be available on a gift of a dwelling house which is made to a dependant relative, i.e. a relative of the person making the gift or his spouse/ civil partner, and who is permanently and totally incapacitated by reason of mental or physical infirmity.
A new deemed occupation clause allows a donor or beneficiary to count a period when he is out of occupation of his home due to mental or physical illness as a period of occupation. If this provision is being relied on to avoid a clawback of the relief, then the medical condition must be certified by a medical practitioner.
The taxation consequences of this amendment are significant, so one should seek taxation advice on the implications for future gifts and inheritances.
For further information contact:
Name: Marie Bradley, Managing Director, Bradley Tax Consulting
Address: 14 Upper Leeson Street, Dublin 4
Tel: + 353 1 400 4123