Capital Acquisitions Tax Consolidation Act 2003 (Number 1 of 2003)
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86 Exemption relating to certain dwellings.
[CATA 1976 s59C]
(1) In this section—
“dwelling-house” means—
(a) a building or part (including an appropriate part within the meaning of section 5(5)) of a building which was used or was suitable for use as a dwelling, and
(b) the curtilage of the dwelling-house up to an area (exclusive of the site of the dwelling-house) of one acre but if the area of the curtilage (exclusive of the site of the dwelling-house) exceeds one acre then the part which comes within this definition is the part which, if the remainder were separately occupied, would be the most suitable for occupation and enjoyment with the dwelling-house;
“relevant period”, in relation to a dwelling-house comprised in a gift or inheritance, means the period of 6 years commencing on the date of the gift or the date of the inheritance.
(2) In this section any reference to a donee or successor is construed as including a reference to the transferee referred to in section 32(2).
(3) Subject to subsections (4), (5), (6) and (7), a dwelling-house comprised in a gift or inheritance which is taken by a donee or successor who—
(a) has continuously occupied as that donee or successor’s only or main residence—
(i) that dwelling-house throughout the period of 3 years immediately preceding the date of the gift or the date of the inheritance, or
(ii) where that dwelling-house has directly or indirectly replaced other property, that dwelling-house and that other property for periods which together comprised at least 3 years falling within the period of 4 years immediately preceding the date of the gift or the date of the inheritance,
(b) is not, at the date of the gift or at the date of the inheritance, beneficially entitled to any other dwelling-house or to any interest in any other dwelling-house, and
(c) continues to occupy that dwelling-house as that donee or successor’s only or main residence throughout the relevant period,
is exempt from tax in relation to that gift or inheritance, and the value of that dwelling-house is not to be taken into account in computing tax on any gift or inheritance taken by that person unless the exemption ceases to apply under subsection (6) or (7).
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(3A) For the purposes of subsection (3)(a), in the case of a gift—
(a) any period during which a donee occupied a dwelling house that was, during that period, the disponer’s only or main residence, shall be treated as not being a period during which the donee occupied the dwelling house unless the disponer is compelled, by reason of old age or infirmity, to depend on the services of the donee for that period,
(b) where paragraph (a)(i) of subsection (3) applies, the dwelling house referred to in that paragraph is required to be owned by the disponer during the 3 year period referred to in that paragraph, and
(c) where paragraph (a)(ii) of subsection (3) applies, either the dwelling house or the other property referred to in that paragraph is required to be owned by the disponer during the 3 year period referred to in that paragraph.
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(4) The condition in paragraph (c) of subsection (3) shall not apply where the donee or successor has attained the age of 55 years at the date of the gift or at the date of the inheritance.
(5) For the purpose of paragraph (c) of subsection (3), the donee or successor is deemed to occupy the dwelling-house concerned as that donee or successor’s only or main residence throughout any period of absence during which that donee or successor worked in an employment or office all the duties of which were performed outside the State.
(6) If a dwelling-house exempted from tax by virtue of subsection (3) is sold or disposed of, either in whole or in part, within the relevant period, and before the death of the donee or successor (not being a donee or successor who had attained the age of 55 years at the date of the gift or inheritance), the exemption referred to in that subsection shall cease to apply to such dwelling-house unless the sale or disposal occurs in consequence of the donee or successor requiring long-term medical care in a hospital, nursing home or convalescent home.
(7) The exemption referred to in subsection (3) shall cease to apply to a dwelling-house, if at any time during the relevant period and—
(a) before the dwelling-house is sold or disposed of, and
(b) before the death of the donee or successor,
the condition specified in paragraph (c) of subsection (3) has not been complied with unless that non-compliance occurs in consequence of the donee or successor requiring long-term medical care in a hospital, nursing home or convalescent home, or in consequence of any condition imposed by the employer of the donee or successor requiring the donee or successor to reside elsewhere.
(8) Where a dwelling-house exempted from tax by virtue of subsection (3) (in this section referred to as the “first-mentioned dwelling-house”) is replaced within the relevant period by another dwelling-house, the condition specified in paragraph (c) of subsection (3) is treated as satisfied if the donee or successor has occupied as that donee or successor’s only or main residence the first-mentioned dwelling-house, that other dwelling-house and any dwelling-house which has within the relevant period directly or indirectly replaced that other dwelling-house for periods which together comprised at least 6 years falling within the period of 7 years commencing on the date of the gift or the date of the inheritance.
(9) Any period of absence which would satisfy the condition specified in paragraph (c) of subsection (3) in relation to the first-mentioned dwelling-house shall, if it occurs in relation to any dwelling-house which has directly or indirectly replaced that dwelling-house, likewise satisfy that condition as it has effect by virtue of subsection (8).
(10) Subsection (6) shall not apply to a case falling within subsection (8), but the extent of the exemption under this section in such a case shall, where the donee or successor had not attained the age of 55 years at the date of the gift or at the date of the inheritance, not exceed what it would have been had the replacement of one dwelling-house by another referred to in subsection (8), or any one or more of such replacements, taken place immediately prior to that date.
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86. Exemption relating to certain dwellings
(1) In this section—
“dwelling house” means—
(a)a building or part (including an appropriate part within the meaning of section 5(5)) of a building which was used or was suitable for use as a dwelling, and
(b)the curtilage of the dwelling house up to an area (excluding the site of the dwelling house) of 0.4047 hectares, but if the area of that curtilage (excluding the site of the dwelling house) exceeds 0.4047 hectares, then the part which comes within this definition is the part which, if the remainder were separately occupied, would be the most suitable for occupation and enjoyment with the dwelling house;
“relevant period”, in relation to a relevant dwelling house comprised in an inheritance, means the period of 6 years commencing on the date of the inheritance;
“successor” includes a transferee under an inheritance referred to in section 32(2).
(2) In this section a “relevant dwelling house”, in relation to a disponer or a successor, as the case may be, is a dwelling house that—
(a)was occupied by the disponer as his or her only or main residence at the date of [6]>his or her death,<[6][6]>his or her death, and<[6]
(b)was continuously occupied by the successor as his or her only or main residence—
(i)throughout the period of 3 years immediately preceding the date of the inheritance, or
(ii)where the dwelling house replaced another dwelling house as that successor“s only or main residence, the first-mentioned dwelling house and the dwelling house that was replaced as that successor”s only or main residence, for periods which together comprised at least 3 years falling within the period of 4 years immediately preceding [7]>the date of the inheritance, and<[7][7]>the date of the inheritance.<[7]
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(c) is the only dwelling house to which the successor is beneficially entitled or in which the successor has a beneficial interest at the date of the inheritance of that dwelling house, whether or not that successor had such an entitlement before the date of the inheritance or acquires the entitlement by virtue of that inheritance.
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(2A) For the purposes of subsection (2), a successor is deemed to be beneficially entitled to, or to have a beneficial interest in, a dwelling house that is subject to a discretionary trust under or in consequence of a disposition made by the successor where that successor is an object of the trust.
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(3)For the purpose of subsection (2), a disponer or a successor, as the case may be, is deemed to occupy a dwelling house for a period during which he or she ceases to occupy that dwelling house in consequence of his or her mental or physical infirmity.
(4)Subject to [9]>subsections (5) and (6)<[9][9]>subsections (4A), (4B), (5) and (6)<[9], a relevant dwelling house is exempt from tax in relation to the inheritance by the successor of the dwelling house and the value of the dwelling house shall not be taken into account in computing tax on any gift or inheritance taken by a successor who takes an inheritance of the relevant dwelling house.
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(4A) For the purposes of subsection (4), and in relation to a disponer and a successor—
(a) a dwelling house shall not be regarded as a relevant dwelling house where the successor is beneficially entitled to, or has a beneficial interest in, any other dwelling house—
(i) at the date of the inheritance of the first-mentioned dwelling house in this paragraph (a), or
(ii) at the valuation date of the first-mentioned dwelling house in this paragraph (a), if this date is later than that date of inheritance and such entitlement to, or interest in, that dwelling house is taken from the disponer,
and
(b) where—
(i) a dwelling house to which the successor is beneficially entitled, or in which the successor has a beneficial interest, is regarded as a relevant dwelling house, and
(ii) that successor acquires a subsequent beneficial entitlement to or a beneficial interest in any other dwelling house by way of an inheritance taken from the disponer,
the first-mentioned dwelling house in this paragraph (b) shall cease to be regarded as a relevant dwelling house on the date on which that subsequent entitlement or interest is acquired.
(4B) Where paragraph (b) of subsection (4A) applies—
(a) subparagraphs (i) and (ii) of subsection (6) shall apply as if the dwelling house had not been a relevant dwelling house at the date of the inheritance, and
(b) the relevant date (within the meaning of section 46(5)) from which interest is to be charged in accordance with section 51(2) shall be the earliest valuation date for any other dwelling house to which the successor takes a beneficial entitlement or in which the successor takes a beneficial interest from the disponer if that date is later than the date which, apart from this subsection, would be the relevant date.
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(5)For the purposes of subsection (4), a dwelling house shall not be regarded as a relevant dwelling house where it is taken—
(a)by way of a gift, other than where it is taken by a dependent relative under subsection (9), or
(b)under a disposition referred to in paragraph (c) of section 3(1).
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(5)For the purposes of subsection (4), a dwelling house shall not be regarded as a relevant dwelling house where it is taken?—
(a)by way of a gift, or
(b)under a disposition referred to in paragraph (c) of section 3(1),
unless it is taken by a dependent relative under subsection (9).
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(6)Subject to subsection (7), a dwelling house shall cease to be regarded as a relevant dwelling house where—
(a)the dwelling house is sold or disposed of (either in whole or in part) within the relevant period and before the death of a successor, or
(b)a successor ceases to occupy the dwelling house as his or her only or main residence during the relevant period,
and, as a consequence of such sale, disposal or cessation—
(i)tax shall be chargeable in relation to the inheritance by the successor of the dwelling house, and
(ii)the value of the dwelling house shall be taken into account in computing tax on any gift or inheritance taken by a successor who takes an inheritance of the relevant dwelling house,
as if that dwelling house had not been a relevant dwelling house at the date of the inheritance.
(7)(a) Notwithstanding subsection (6), a dwelling house shall not cease to be regarded as a relevant dwelling house where—
(i) the entirety of the consideration for the sale or disposal of the dwelling house (in this subsection and in subsection (8) referred to as the “inherited dwelling house”) is used by a successor to acquire a dwelling house to replace the inherited dwelling house as the successor“s only or main residence (in this subsection and in subsection (8) referred to as the ”replacement dwelling house“), the period of occupation of which as the successor”s only or main residence, when added to the period of occupation of the inherited dwelling house as his or her only or main residence, amounts to an aggregate period comprising at least 6 years falling within the period of 7 years commencing on the date of the inheritance,
(ii)a successor is of the age of 65 years or over at the date of the inheritance of the dwelling house,
(iii)a successor ceases to occupy the dwelling house in consequence of his or her mental or physical infirmity (which infirmity is certified by a registered medical practitioner who is registered in the register established under section 43 of the Medical Practitioners Act 2007), whether or not the dwelling house is sold or disposed of, or
(iv)a successor is required to be absent from the dwelling house in consequence of any condition imposed by his or her employer requiring the successor to reside elsewhere for the purposes of performing the duties of his or her employment.
(b) Subparagraphs (iii) and (iv) of paragraph (a) shall apply to a replacement dwelling house, as they apply to a relevant dwelling house.
(8)Where the consideration for the sale or disposal of an inherited dwelling house, or a replacement dwelling house, as the case may be, (in this subsection referred to as the “sold dwelling house”) exceeds the consideration for the acquisition of any replacement dwelling house (in this subsection referred to as the “acquired dwelling house”) acquired as a replacement for the sold dwelling house, then the value of the sold dwelling house which is chargeable to tax under subsection (6) shall be reduced in the same proportion as the consideration for the acquired dwelling house bears to the consideration for the sold dwelling house.
(9)(a) In this subsection—
“relative”, in relation to the disponer, or to the spouse or civil partner of the disponer, as the case may be, means lineal ancestor, lineal descendant, brother, sister, uncle, aunt, niece or nephew;
“dependent relative” means a relative who is—
(i)permanently and totally incapacitated by reason of mental or physical infirmity from maintaining himself or herself, or
(ii)of the age of 65 years or over.
(b) For the purposes of this section, a dependent relative who takes a gift of a dwelling house shall be deemed to take the dwelling house as an inheritance on the date of the gift.
(c) Where a dependent relative takes [4]>a gift<[4][4]>or inheritance<[4] of a dwelling house, paragraph (a) of subsection (2) shall not apply for the purposes of determining whether the dwelling house is a relevant dwelling house.
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Substituted by FA16 s52. This section will apply to inheritances of dwelling houses or gifts of dwelling houses to dependent relatives on or after 25 December 2016.