Dáil Éireann Debate, Wednesday - 22 January 2025
355. Deputy Barry Ward asked the Minister for Finance if he will give consideration to varying the rate of capital acquisitions tax when it comes to residential property; and if he will make a statement on the matter. [2077/25]
Amharc ar fhreagraCapital Acquisition Tax (CAT) is a tax on gifts and inheritances. Individuals may receive gifts and inheritances up to a set threshold over their lifetime before having to pay CAT. Once due, it is charged at the rate of 33%. In Budget 2025, the Group A threshold was increased from €335,000 to €400,000, Group B from €32,500 to €40,000 and Group C from €16,250 to €20,000.
It is worth noting that there is an exemption from CAT where dwelling houses are bequeathed to individuals who:
• have lived there for a specified period of time before the inheritance,
• will continue to live there for a specified period of time after the inheritance, and
• who have no beneficial interest in any other residential property at the date of the inheritance.
The policy rationale behind the dwelling house exemption is to protect the family home by ensuring that a beneficiary who has been living with the disponer, and will continue to reside there after the inheritance, does not have to sell that family home to pay a CAT liability and thus will continue to have somewhere to live. It is not necessary for the beneficiary of an inheritance under the dwelling house exemption to be a child or relative of the disponer.
You should be aware that there would be a significant cost in making substantial changes to the rate of CAT. The options available for setting CAT rates and thresholds must be balanced against competing demands, and as part of the annual Budget and Finance Bill process.
