# Capital Acquisitions Tax aggregation



## zag (10 Jun 2013)

Picture this scenario (using round figures for ease of interpretation) -

2001 - person receives gift of €75,000 from parent, below threshold, no tax paid
2009 - person inherits €500,000 from parent, threshold is €542,000, cumulative amount is €575,000, tax paid on €33,000, all good.
2012 - person receives gift of €10,000 from parent, cumulative amount is €585,000, but the threshold is now €225,000, so . . . there's 33% tax payable on €360,000 

From my reading of the Revenue documentation this appears to be the case. Someone please tell me it ain't so. Please.

Is there no concept of having paid all due taxes in 2009? I understand why you might want to aggregate all gifts over the years, but does the threshold in force at the time not come into play?

z


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## mandelbrot (10 Jun 2013)

*http://www.revenue.ie/en/tax/cat/aggregation-rules.html
*

*Benefits taken on or after 5th December 2001:*

  All benefits taken from the same Group Threshold since 5th December  1991 are added together to calculate the tax on the latest benefit.
 Calculation in respect of the latest of a series of benefits taken since 1991:


Aggregate all prior benefits within the same group threshold as the  current benefit with the current benefit and calculate the tax on the  total.
Aggregate all prior benefits within the same group threshold as the  current benefits, excluding the current benefit and calculate the tax  on the total.
Subtract tax at (2) from tax a (1) - this gives tax referable to the current benefit.
 This calculation applies where aggregation applies in relation to same group/class threshold only.


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## mandelbrot (10 Jun 2013)

Following the instructions above, given the facts as you outlined:

1. Aggregate all prior benefits within the same group threshold as the  current benefit with the current benefit (€585,000) and calculate the tax on the  total.
Taxable amount €585k - €225k = €360k. Tax @ 33% = €118,800

2. Aggregate all prior benefits within the same group threshold as the   current benefits, excluding the current benefit (€575,000) and calculate the tax   on the total.
Taxable amount €575k - €225k = €350k. Tax @ 33% = €115,500.

3. Subtract tax at (2) from tax a (1) - this gives tax referable to the current benefit.
€118,800 - €115,500 = €3,300

Put in simple English, if you've already exceeded the relevant threshold, the current gift/inheritance will be taxable in full at the applicable rate - in this case the gift of €10k is taxable at 33%.


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## Brendan Burgess (11 Jun 2013)

Hi mandelbrot

A great and clear explanation. You should write the Revenue Guides.

Brendan


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## zag (11 Jun 2013)

Phew, many thanks.  That's a load off the mind for today.

Cheers,

z


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## backothehill (29 Jun 2013)

We, in our fifties, own an apartment in Dublin, that is probably down in value to about €225,000...Should we transfer ownership to one of our adult kids now, thereby avoiding capital acquisitions tax?..It's a rental property, renting well but it is in negative equity.


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## Joe_90 (29 Jun 2013)

Should you gift a property in negative equity to your child to avoid tax?  

They might accept the property but a loan in excess of the value?


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## backothehill (30 Jun 2013)

Thanks Joe.


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## huskerdu (30 Jun 2013)

backothehill said:


> We, in our fifties, own an apartment in Dublin, that is probably down in value to about €225,000...Should we transfer ownership to one of our adult kids now, thereby avoiding capital acquisitions tax?..It's a rental property, renting well but it is in negative equity.




As you mention negative equity , I assume there is a mortgage. You can't sell or give away the apartment without the mortgage being cleared. 

Only way you can transfer ownership, is if you hand over the cash to cover the negative equity, or get a loan to cover it. 

Your son or daughter ( the new owner) will have to apply for a mortgage in their own name, and will only get 92% of the current value of the apartment, assuming that a bank will give them a mortgage for an investment property at all. 

It sounds to me like the plan will not work at all, and the cost and hassle would not be worth it to minimize the risk of CAT in the future.


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## tropicalfish (23 Aug 2013)

Hi. I have a question about CAT. In 2007, my father transferred a property valued at €90k to me. This year he transferred land and property to me valued at €226k. What CAT will I have to pay?


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## jpd (24 Aug 2013)

prior benefit|90,000
Current benefit|226,000
Cumulative benefit|316,000
less Threshold|-225,000
Taxable benefit|91,000
Tax rate|33%
Tax due|30,030


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## Joe_90 (24 Aug 2013)

Land may qualify for agricultural relief go and get professional advice, it may save you €30k.


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## tropicalfish (24 Aug 2013)

Unfortunately the land won't qualify for agricultural relief. I thought that it might not be as high as that after reading what Mandlebrot posted


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## tropicalfish (24 Aug 2013)

Unfortunately the land won't qualify for agricultural relief. I thought the amount due might not be so high after reading what Mandelbrot posted.


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## Meath Lady (24 Aug 2013)

can a parent gift 3000 to a son/daughter  each year without the reciepient paying tax on it. can the son/daughter receive just one three thousand or can each parent gift them it


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## mercman (24 Aug 2013)

AFAIK, every single person is classed as a separate donation. Therefore it's €3000 from each person regardless of relation class.


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## Meath Lady (25 Aug 2013)

Thanks Mercman,
So if I understand you correctly both parents could gift their son 3000 euro in the one year and he would not have to pay any tax on it.


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## mercman (25 Aug 2013)

That's my take on it. I and my wife have done it between families for years, and my accountants who have been kept fully abreast of the situation have never raised a query.


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## Meath Lady (25 Aug 2013)

Sounds good. thanks Mercman


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