New rules make it harder for parents to gift property to their children

New rules make it harder for parents to gift property to their children

The new Help-to-Buy scheme for first-time buyers received plenty of publicity when it came into force at the start of the year.

However, another new rule also came into play over the festive period which could also have an impact on the property market.

This new rule will make it much harder for parents to gift property to their children.

The previous dwelling-house exemption had allowed a person to be gifted ownership of a property without having to pay inheritence tax as long as they lived in the property for three years before the gift or inheritence was made ad for a further six years thereafter.

The original polciy was in place to ensure that a person living with the deceased did not have to sell the house to pay the tax liability.

However, it was later expanded so that anybody – even if not related at all to the donor – could avail of the exemption.

Claims of abuse of the system then led to pressure for reform.

Figures for the Revenue show that almost 3,000 claims for the dwelling-house exemption were made between 2011 and 2015. The numbers jumped 14 per cent in 2014 and 19 per cent in 2015.

According to The Irish Times, TD Joan Collins said some families were using the section 86 exemption relief “where second and in some cases third and fourth homes are being bought for children, often for over €1 million”.

She said as many as 740 people availed of the scheme in 2015 and said “the abuse of this scheme has been a concern of Revenue for years”.

Now the rules have been tightened sharply.

The exemption will apply only to people inheriting homes, with only one exception. Gifting shall be possible only for relatives and then only if they are permanently or totally incapacitated from providing for themselves by virtue of a physical or mental infirmity, or else if they are older than 65 years of age.

In the case of inheritance, the exemption will apply only to the donor’s main home – or principal private residence. Until now a person could buy a home in which their child would live independently and then inherit it tax-free on their parent’s death.

The person inheriting will have to have lived with the person giving them the home for at least three years before they inherit and, as before, stay in the property for six years thereafter.

A previous relief ending that provision at the age of 55 has now been risen to 65.

The Revenue Commissioners “conservatively” estimate that the dwelling-house exemption cost the exchequer an average of €3.75 million a year between 2011 and 2015, or €18.76 million in total.

The new rules apply to any house gifted or inherited after last Christmas Day when the President signed the Finance Bill into law.

  • Do you think the new changes are correct?
  • Are you concerned they will impact you?
  • Have you availed of the dwelling-house exemption in the past?

Have your say below…

There are 9 comments for this article
  1. peadar at 3:43 pm

    In the article above it say’s – “the person living with the deceased” . Just wondering is that a good idea ?

  2. Jac at 12:27 am

    Should issues like this not be openly discussed before decisions are made. Why should anybody that do well be punished in this country? It is a terrible thing that there is no government or party in this country that can protect hardworking people.
    The begrudging Journalist and leftist would rather see everyone improvished.
    I wonder who will then pay for the social welfarism they are trying to develop.
    Those of you blaming European union should stop. Ireland is a sovereign state EU cannot dictate every bit of regulation. Don’t be fooled. This is a nation of begrudge!

  3. Stella O’Shea at 10:57 pm

    Well said everyone

  4. Fintan at 10:00 pm

    When the average man is using a piece of legislation to benefit they reform, when all the crooks of politicians and their mates use various loop holes and rorts to their benefit nothing gets done

  5. STEPHEN at 5:01 pm

    Another senseless money grabbing measure by this Scrougist Government after the implementation of Property Tax and enforced Water Charges. Given the homeless crisis are we to understand that this measure could increase the figure. Surely in Democratic Ireland parents should have the right to make provision for their children if they can afford to do so.

  6. Marie Halligan at 4:50 pm

    This is just one of the many stealth moves to render Ireland a nation of tenants again. They have been banging on at us how nearly everyone in Continental Europe rents, as if that’s a good thing,in an effort to manipulate us to be less keen on home ownership and they’ve been doing the same in Britain for years too. This is because tenants have less security and thus,less power that home-owners. We should beware in this country because home-ownership is out of the question for most ordinary Brits these days,so the agenda is progressing well there and we don’t want the same thing to happen here, do we???

  7. Robert at 3:53 pm

    The bureaucratic mud pit that we have progressively slid into over the years thanks to Brussels and membership of the European Union is becoming increasingly intolerable. Soon it will be hard to break wind without having to pay some form of fee, levy or tax. There are rules,regulations and costs attached and related to almost everything bar breathing. I hate living in Ireland in the 21st century, it sucks.

  8. Barbara Seligman at 2:19 pm

    I take it now that the Taoiseach has sorted out his inheritance, the new rules apply to everyone else!!!

  9. Wandeck at 12:29 pm

    Punishment for the innocent again

Leave a Reply