Capital Acquisitions Tax

Bigboldworld

Hi folks,

Take this scenario below,

An uncle is residing in a nursing home, house is lying empty, uncle will leave house to two nephews in will, one nephew sells their own house and moves into uncles house and lives in house for three years before uncle passes and six years after more likely lives in home for life as primary residence, when inheritance kicks in will house be exempt from inheritance tax as there is an exemption on cat for the family home if relation has lived in house for the period needed to be met, or will the inheritance tax exemption just apply to person who lived in the house rather than the house itself?

Lockedout2

The owner has to live in the house prior to the inheritance with the beneficiary.

I’d imagine in genuine cases the Revenue would consider time in a nursing home may qualify if both had lived in the house prior.

https://www.revenue.ie/en/gains-gifts-and-inheritance/cat-exemptions-and-reliefs/exemption-for-dwelling-house/index.aspx

Bigboldworld

Thanks for the reply, having read the further detail in the document on revenue’s website it states

An exception to the residency requirement is made where a disponer is absent from his or her only or main residence because of physical or mental ill health at the date of death; for example, if the person has moved into a nursing home. In this situation, the disponer is deemed to have lived in the dwelling house at that time (section 86(3)). (see example 6.2 below).

It also states below

A successor must have lived in a dwelling house as his or her only or main residence for the 3 years immediately preceding the date of the inheritance (see example 6.3 below). Combined with the requirement for a disponer to have lived in the dwelling house as his or her only or main residence at the date of death, this means that, in effect, the disponer and successor will have lived together in the house for some or all of that 3-year period.

Does paragraph one cancel out paragraph two in terms of the residency exception as they state that residing in a nursing home is taken the same as living in the home it doesn’t explicitly state both parties needed to live together before said person went to a nursing home?

Peregrinus

I think the exemption will be available; I don't see anything in the legislation which says that the disponer and the successor must actually have been living in the house together for any period of time. If the disponer is deemed to be in occupation for the whole of the three-year period, and the successor is actually in occupation for that period, that's enough to bring the case within the exemption.

However with reference to the question raised in the OP, it's only the inheritance by the nephew who occupies the house that will be exempt. The half-share inherited by the other nephew will be subject to CAT in the usual way.