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Dwelling House Relief Exempts Homes from Inheritance Tax

Sellors LogoThe Finance Act 2016 was signed into law on Christmas Day and has changed the rules surrounding dwelling house relief. The rationale behind the relief is to cater for a person who may have cared for the owner of a property and who resides at a property. In this regard, it is noteworthy that the parties do not have to be related to one another. The changes mean that people are, subject to certain conditions, exempt from paying capital acquisitions tax (CAT) on the property when they inherit it.

The main conditions are:

  • The property must be occupied by the owner as his/her main residence at the time of death.
  • The person inheriting the home must:
    • not have a vested interest in another property.
    • have resided there for 3 years prior to the inheritance.
    • reside at the property for 6 years after inheritance.

While the existing section 86 of the Capital Acquisitions Tax Consolidated Act 2003 allowed for a tax exemption for “gifts or inheritances”, the new amended relief only applies to inheritances with the exception of gifts to a “dependant relative”. A dependant relative is a person over 65 years of age or someone who is mentally or physically incapacitated.

At Keating Connolly Sellors we have expert taxation knowledge and can advise you on how you may be effected by dwelling house relief and the changes introduced in the Finance Act 2016.

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Fionnuala Keating, Solicitor and Tax Advisor at Keating Connolly Sellors, has over 20 years’ experience advising on all areas of taxation. If you have a query about dwelling house relief or another taxation matter, contact Fionnuala at [email protected] or call +353 (0)61 414 355 or +353 (0)61 432 346.

The material contained in this article is for general information purposes only and does not constitute legal or other professional advice. We advise people to always seek specific expert advice for their individual circumstances.

Published On: January 25, 2017

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