CAN I GIVE GRANDSON MY HOUSE WITH NO TAX HIT? Here are the Capital Acquisitions Tax thresholds (from October 12, 2016) Group A – €310,000: A child. Parents also

QI was very interested in your reply to a query regarding inheritance tax on the family home. My grandson has lived with me nearly all his life and is my carer. I am now aged 87 and going into sheltered accommodation. Can I give the house to him tax-free under the dwelling house exemption?

AThat previous question concerned an inheritance. While Capital Acquisitions Tax covers both gifts and inheritances, the rules are different for each.

It seems that you could leave the house to your grandson tax-free as an inheritance.

But, if it’s a gift, it seems unlikely that he would meet a new stipulation under the dwelling House exemption:

The person receiving the gift must be a ‘dependent relative’ of the person making the gift. This means a direct relative or spouse or civil partner, who is permanently and totally incapacitated because of physical or mental infirmity from maintaining himself or herself – or who is over the age of 65.

I will send on further details by email including a detailed response from the Revenue Commissioners to your query.

QI refer to your recent response about passing on a house tax-free to a son. Wasn’t that tax loophole closed last year? Does the recipient have to be a carer now to avail of exemption?

AThere’s a lot of confusion around the issue as outlined in the previous question. To qualify for the dwelling house exemption on the gift of a home, there is a new stipulation. It’s outlined in the query above and does indeed close a loophole for gifts, which was apparently being abused.

However, in another development, the recipient of an inheritance actually no longer has to be a carer in order to qualify for the valuable dwelling house exemption in certain circumstances!

Previously, the period the disponer and beneficiary lived together in the property prior to making the gift would not count towards the three-year prior occupancy requirement unless the recipient was a carer. This provision is no longer relevant for properties gifted on or after December 25, 2016.

More information on the exemption is available on the Revenue website.

However, given the complications and confusion surrounding this issue, anyone thinking of leaving a home to a relative should get advice from a solicitor when drawing up their will.

It doesn’t cost that much. Many solicitors charge no more than €100 – no doubt because they hope to carry out the far more lucrative probate work on the same estate on which 1% commission is usually charged. fall within this threshold where they take an inheritance of an absolute interest from a child Group B – €32,500: Brother, sister, niece, nephew or lineal ancestor or lineal descendant (including grandchildren) Group C – €16,250: Applies in all other cases. I want to help a friend to buy a house. What are the tax implications of gifting or lending her the money, say €25,000?

QAFirst let’s look at gift tax. This is charged at 33% of any value above certain thresholds. These amount to €16,250 over a lifetime (see above) but you also get an annual allowance of €3k every year. If you spread the gift over two years, you would get the benefit of two years’ annual allowance of €3k = €6k. That added to your lifetime allowance of €16.25k makes €22.25k. Tax would be due on €2.75k at 33% = €908. But to avoid this, you may wish to restrict your gift to the tax-free limit of €22k.

If you lent her the money instead, the interest rate would have to be at the market rate to avoid being seen as a gift.

You would also have to pay income tax on the interest you receive and file a return through the self-assessment system.

Those are basic principals but you should really go over it with your accountant.