Proposed changes to Dwelling House Relief

Dwelling House Relief from Capital Acquisitions Tax
Finance Bill 2016 Proposed Committee Stage amendments 

Finance Bill 2016 proposed amendments at Committee Stage (published 4 November 2016) include changes to the current Capital Acquisitions Tax (CAT) exemption for gifts or inheritances of a dwelling house, these proposed changes will significantly impact the availability of the relief. In brief the proposed amendments restrict the exemption to inheritances (rather than gifts, however, see below) of dwelling houses and the house must be occupied by both the disponer and the beneficiary on the date of the inheritance.

The exemption will apply to gifts made to dependent relatives (as defined) only, there is no requirement for the disponer and dependent relative to both occupy the house in such a case.

Proposed changes to the clawback provisions mean that the age at which a beneficiary can take a property without being subject to a clawback is 65 years, increased from 55 years. A new deemed occupation provision will apply if a donor or beneficiary is out of occupation due to mental or physical infirmity.

The proposed Committee Stage amendments are being debated in the Dáil this week. The Bill is due to move to Report Stage later this month and pass to the Seanad early December. We expect that the Bill will be signed into law before the end of the year.

The Bill and proposed Committee Stage amendments are available here.

If you have any queries on Dwelling House Relief or any provision of Finance Bill 2016 please contact us.

Please note that the amendments proposed at Committee Stage are subject to change and therefore the Dwelling House Relief  provisions may change and are not final until the Finance Bill 2016 is passed into law.