Dwelling House Exemption – Finance Act 2017 Amendments


Section 86 of Capital Acquisitions Tax Consolidation Act 2003 provides for an exemption from capital acquisitions tax (CAT) where residential properties are acquired for less than market value. If the exemption applies, then no CAT liability is payable. The exemption is commonly referred to as the Dwelling House Exemption.

Finance Act 2017 amends the legislation to provide clarity on two points -

  1. there is no requirement for the dwelling house to have been the principal private residence of the disponer at the date of his or her death, and
  2. a gift of a dwelling house that would usually be treated as an inheritance where a disponer dies within two years of making the gift can qualify for the exemption.

In summary, a dwelling house qualifies for the exemption where –

  1. it was occupied as the only or main residence of a disponer at the date of his or her death (except in the case of a gift or an inheritance taken by a dependent relative);
  2. it was occupied by a successor as his or her only or main residence for the three years immediately preceding the date of the inheritance or, where the dwelling house for which the exemption is claimed replaced another dwelling house as the successor’s only or main residence, the combined period of occupation was at least three years falling within the four years preceding the date of the inheritance;
  3. it is the only dwelling house in which a successor has a beneficial interest at the date of the inheritance; and
  4. it is transferred by way of an inheritance except in the case of
    1. a gift of a dwelling house to a dependent relative, or
    2. a gift to a dependent relative that becomes an inheritance when a disponer dies within two years of making the gift.

Please contact Róisín McDaid in OSK Tax on 01 439 4200 in relation to the Capital Acquisitions Tax Consolidation Act 2003 and the Dwelling House Exemption or in relation your tax planning queries.

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