Your Questions.

A disponer is the person who gives you the gift or inheritance.

A beneficiary is the person who receives the gift or inheritance.

A gift becomes an inheritance if the disponer dies within two years of giving the gift.

This is where someone gives a gift of property but reserves the right to take it back at any time. In these circumstances, CAT isn’t due.

However, if you are given property under these terms CAT will become payable if the person giving the gift:

• Gives up the right to take it back
• Passes away and the gift becomes an inheritance.

If you think you need to pay gift and inheritance tax you’ll need to complete an IT38 form or file a tax return online at Revenue.ie.

The deadline for any money you owe will depend on the valuation date of your gift or inheritance:

If it’s between 1st January and 31st August you will need to pay by 31st October that year.

If it’s between 1st September and 31st December you’ll need to pay by 31st October the following year.

If you’re registered for the Revenue Online Service, you can choose to pay by either:

1. Single Debit Instruction
2. Credit or Debit card

If you don’t live in Ireland then you will need to pay by Electronic Funds Transfer. You can find out more about how to pay your CAT online on the Revenue.ie website.

If you’re late paying there could be extra charges to pay and interest added to what you owe.

The valuation is the day that the market value of the property comprising the gift/inheritance is established. In the case of a gift, the valuation date is normally the date of the gift.

If it’s an inheritance, the valuation date is normally the earliest of the following dates:

• Date the inheritance can be set aside for or given to the beneficiary
• Date it’s actually retained for the benefit of the beneficiary
• Date it’s transferred or paid over to the beneficiary

The valuation date is typically the date of death in the following circumstances:

• Gift made in contemplation of death
• Where a power of revocation hasn’t been exercised – This could happen
  if a person makes a gift of property but reserves the power to take back
  the gift. If he or she dies and this power ceases, the recipient then
  becomes taxable as inheriting the benefit.

If the beneficiary had free use of the benefit before this, he or she will be taxed as receiving a gift of the value of the use of the property.

A gift acquires its market value at the time you become entitled to it.

The value that’s taxable is then the market value after following deductions:

• Any liabilities
• Costs and expenses that are properly payable
• Including debts due to the inheritance or gift-for example, funeral expenses,
  costs of administering the estate or debts owed by the deceased
• Stamp duty, legal costs

If you make a payment for the benefit or some other contribution in return for it, this may be deducted and is known as a ‘consideration’ and could be a part
payment or payment of debts of the donor.

If you don’t get full ownership but instead receive a benefit for a limited period,
then a number of factors are taken into account to calculate the value.

Capital Acquisitions Tax is charged at 33% on gifts or inheritances made on or after 6 December 2012 (the rate was formerly 30%).

This only applies to amounts of capital gain over the group threshold.

Exemptions from CAT include:

• Gifts/inheritances from a spouse/civil partner
• Payments or compensation for damages
• Benefits used only for the medical expenses of a permanently incapacitated person
• Benefits taken for charitable purposes or received from a charity
• Lottery, sweepstake, game, or betting winnings
• Retirement benefits, pension, and redundancy payments are usually not liable

The first €3,000 of the total value of all gifts received from one person in any calendar year is exempt. This doesn’t apply to inheritances.

If you receive a gift or inherit a house that was your main residence, it may be exempt from tax if you don’t own or have an interest in another house, however there are conditions on how long you should be resident before and after receiving the benefit.

If a parent receives an inheritance from his/her child and takes complete ownership of the inheritance, it’s usually taxable under Group A. However it’s exempt if in the previous 5 years, the child took an inheritance or gift from either parent and it was not exempt from Capital Acquisitions Tax.

Other exemptions relate to certain Irish Government securities, bankruptcy,
heritage property, and support of a child or spouse.