Inheritance Tax Exemption for resident of house?

E

Ellie10

Guest
Hi there,

Just wondering could anyone give me some advice on Inheritance tax please? I was very close to my grandaunt, and lived with her for the past five years as her house was closer to college/work etc than our family home. She also became quite ill and so someone needed to stay with her at night. Unfortunately she passed away a few months ago and I recently found out that she has left me her house in her will as she did not have children or grandchildren of her own. As a grandniece I know I would not have a high tax exemption on this inheritance, but a few people have mentioned that the fact that the house has been my main residence could mean that I may be entitled to some relief? I have no issue in paying any tax that I owe and am not trying to dodge any payments, but does anyone have any further info on this situation? (I'm not sure if my personal situation makes any difference but I have never inherited anything before and am a single student.)

Thanks in advance for any help.
 
Yes, I think you should qualify for the section 86 relief. The relationship is not a condition, but you must have lived in the house as your main residence for at least 3 years immediately before her death, and not own or have an interest in any other dwelling-house (which isn't limited to Irish property).
If you claim the exemption from CAT and sell the house within 6 years there may be a clawback of the relief given. It would depend on the reasons for sale.
 
Thanks so much Gervan for the quick response.

The house has been in the family for generation so I couldn't imagine ever selling it. Can I just ask if you know what kind of proof I would need to show that I lived in the house, as I presume anyone could just say that they lived there? All my neighbours know that I live there obviously and I would have most of my post sent to the address, but is there anything in particular that I need to show?

Thanks again for the help :)
 
Below is the relevant section of the act. (I looked it up as I think it may apply to a friend in a similar situation). You will need to check part c with a solictor. In relation to proof of residency - I assume you'll need some sort of official post (bank statements bills, university registration address etc). The more you have, the better - again, it will probably be worth talking to a solicitor.


GIFT/INHERITANCE CAT 10 ​
[FONT=Arial,Arial][FONT=Arial,Arial]
TAX EXEMPTION FOR DWELLING HOUSE ​
[/FONT][/FONT][FONT=Times New Roman,Times New Roman][FONT=Times New Roman,Times New Roman]
INTRODUCTION ​
[/FONT][/FONT]
Section 86 of the Capital Acquisitions Tax Consolidation Act 2003 provides that gifts or inheritances of a dwelling- house taken on or after [FONT=Times New Roman,Times New Roman][FONT=Times New Roman,Times New Roman]1 December 1999 [/FONT][/FONT]will be exempt from capital acquisitions tax provided the following conditions are complied with -
a) The recipient must have occupied the dwelling- house continuously as his/her only/main residence for a period of 3 years immediately prior to the date of the gift/inheritance. Where the dwelling- house has directly/indirectly replaced other property owned by the disponer, this condition may be satisfied where the recipient has continuously occupied both properties as his/her only/main residence for a total period of 3 out of the 4 years immediately prior to the date of the gift/inheritance;

b) The recipient must not, at the date of the gift/inheritance, be beneficially entitled to any other dwelling- house or to any interest in any other dwelling- house

c) [FONT=Times New Roman,Times New Roman][FONT=Times New Roman,Times New Roman]Gifts taken on or after 20 February 2007[/FONT][/FONT]: Any period during which a donee occupies a house that was during that period the disponer’s only or main residence will be disregarded as a period of occupation in that house unless the disponer is compelled, by reason of old age or infirmity, to depend on the services of the donee for that period. Old age refers to a person aged 65 or over.

d) [FONT=Times New Roman,Times New Roman][FONT=Times New Roman,Times New Roman]Gifts taken on or after 20 February 2007[/FONT][/FONT]: The house must be owned by the disponer during the 3 year period prior to the gift and, where the gifted house has replaced another property, each house must be owned by the disponer for the relevant part of the 3 year period that it was occupied by the beneficiary.

e) The recipient must continue, except where such recipient was aged 55 years or more at the date of the gift or inheritance or has died, to occupy that dwelling- house as his/her only/main residence for a period of 6 years commencing on the date of the gift/inheritance. Where the dwelling- house is directly/indirectly replaced by other property, this condition may be satisfied where the recipient continuously occupied both properties as his/her only/main residence for a total period of 6 out of 7 years commencing on the date of the gift/inheritance. A recipient absent during any time through working abroad is considered to remain in continuous occupation of that dwelling house. ​

The exemption will not be withdrawn where a breach of the condition referred to at ) above is as a result of the recipient requiring long term medical care in a hospital, nursing home or convalescent home or as a result of a condition being imposed by an employer on a recipient to reside elsewhere.
 
You must log in or register to reply here.
Back
Top