Change to Dwellinghouse Relief Exemption
As of the 1st January 2017 major changes for gift and inheritance tax relief on dwelling houses were introduced.
A gift of a dwelling house is now only CAT tax exempt where it is made to a dependent relative. A dependant relative includes a parent, grandparent, child, grandchild, brother, sister, uncle, aunt, niece or nephew of the disponer or their spouse/civil partner who is permanently and totally incapacitated from maintaining themselves, or age 65 years and over. Where this relief applies the disponer does not have to reside in the property at the date of the gift.
The CAT free inheritance of a dwelling may apply if the following conditions are met:
- The person leaving the legacy must have occupied the dwelling as their main residence on the date of death.
- The person inheriting the house must have continuously occupied the dwelling as their main residence for 3 years prior to the inheritance; and
- The beneficiary must not be entitled to or have an interest in any another dwelling at the date of the inheritance. Notably, they are permitted to be part owner of the dwelling they are inheriting.
Following the inheritance the beneficiary must occupy the dwelling (or, if sold, the replacement dwelling) as their main residence for 6 years after the inheritance subject to some exceptions, including age or infirmity.
Copyright © McKeever Solicitors, 15 June 2017.
This article is a general review of the law on the subject and is not intended to be a complete statement of the law. Specific legal advice must be sought on a case by case basis.
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