Gifts and Inheritances – providing for your family

Did you know more than €2.4 million in unclaimed money is being held at the Chief State Solicitor’s Office from the estates of people who died and left no wills and no known beneficiaries. (the Irish Times Oct 2015)

Capital Acquisition Tax (CAT) at a rate of 33% is charged on all gifts and inheritances which exceed a specific lifetime threshold, referred to as a group threshold.

  • Group A lifetime threshold applicable to transfers from a parent to a child is € 310,000.
  • Group B lifetime threshold applicable to transfers between blood relatives. Currently € 32,500.
  • Group C lifetime threshold applicable to transfers between strangers. Currently € 16,500.

In making a gift, the giver (the donor) may be subject to capital gains tax; this depends on whether the gift is a chargeable asset, e.g. land, buildings, shares, works-of-art etc. There are specific rules (see Taxes in Ireland, CGT) on how the value is ascertained for tax purposes.

The receiver of the gift (the donee) is assessed to CAT based on the value of all gifts received from that specific class of donor less the group threshold.

Note that any lifetime gifts of €3,000 or less (max of €3,000 per donor in a calendar year) are ignored.

Inheritances result from a death. The terms of a will or the Succession Act 1965, where the person dies without making a will, stipulate what is to be inherited and by whom.  

No CGT arises in the case of property which is bequeathed as part of an inheritance.

Succession planning is something many people tend to avoid considering. Full consideration of the reliefs available can yield benefits for both the giver and the receiver of the gift or inheritance. The Tax Man can assist, as you address the challenges of this sensitive area of personal tax planning.

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