Capital Acquisitions Tax (CAT) - Business Relief

CAT is a tax on gifts and inheritances. You may receive gifts and inheritances up to a set value over your lifetime before having to pay CAT. Once due, it is charged at a rate of 33%. ‘Gifts’ become inheritances if the person dies within 2 years of giving the gift. There is relief available from capital acquisitions tax on gifts and inheritances taken on or after 11 April 1994 of relevant business property. The relief doesn’t apply to discretionary trust tax.

The relief amounts to a flat 90% reduction in respect of the taxable value of the relevant business property. Where Business Relief is claimed, IT38 CAT Return must be filed electronically through the Revenue Online Service (ROS).

CAT - Dwelling House Exemption

This provides an exemption from capital acquisitions tax where residential dwellings are acquired for less than their market value.

 From 25 December 2016, the very limited exemption applies to:

• gift of a dwelling house to a relative aged 65 years or over

• gift of a dwelling house to a relative who is permanently and totally incapacitated

• inheritance of a dwelling house which was occupied by the disponer as his/her only or main residence at the date of his/her death.

Provided the beneficiary:

Lived in the dwelling house as his/her main residence continuously for 3 years immediately preceding the date of the gift/ inheritance

and

doesn’t have an interest in any other dwelling house at the date of the gift/inheritance.

The beneficiary must continue to own and occupy the dwelling house as his/her main residence throughout the period of 6 years commencing on the date the benefit is taken otherwise the exemption is withdrawn.