Announcement Finance Bill makes huge changes to Dwelling House Relief for CAT

Discussion in 'Budget 2017' started by mcriot29, Nov 27, 2016.

  1. mcriot29

    mcriot29 Frequent Poster

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  2. Brendan Burgess

    Brendan Burgess Founder

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    I am amazed that this has not got more coverage:

    "From now on it will only apply to those inheriting a house where they are living with an aged relative to care for them, or to young children whose parents have died.

    It will also apply in the case of a house gifted to relative aged 65 or more, and property gifted to an incapacitated relative.

    The exemption was introduced to protect someone living with and caring for an older person in the pensioner's home. The fear was these people may have sacrificed their chance to own their own home.

    But the open nature of the exemption meant it allowed a son or daughter inheriting a property to avoid tax provided they lived in it for at least three years, and continued to live there for six years after inheriting it. The property being passed on did not have to be a family home - it could have been a second property or holiday home. If they met these conditions they were, up to now, able to inherit the property tax-free."
     
  3. Brendan Burgess

    Brendan Burgess Founder

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    I agree with the restrictions.

    But it should have been further restricted to €300k even within those categories.

    Brendan
     
  4. T McGibney

    T McGibney Frequent Poster

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    This tax relief was on the statute books for a very good reason and I fear its withdrawal will have serious unforeseen consequences, particularly for vulnerable adults living semi-independently in accommodation provided by parents.
     
  5. dereko1969

    dereko1969 Frequent Poster

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    Well it's been removed because, as is always the way in this country, it was being abused.
     
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  6. Joe_90

    Joe_90 Frequent Poster

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    There are merits in the dwelling house exemption for siblings living together all their lives and one dies leaving their 1/2 to the other. If they are under 65 there may be an exposure to CAT.

    But it was abused I thought that a first step would be to restrict the existing relief to €250k and see how that worked.
     
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  7. Gordon Gekko

    Gordon Gekko Frequent Poster

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    To be fair, I highlighted this almost a month ago.

    The lurch to the left continues.

    This exemption should have been capped rather than abolished.
     
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  8. Markel

    Markel Registered User

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    When is this effective, only from 1 Jan 2017?
     
  9. Gordon Gekko

    Gordon Gekko Frequent Poster

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    Unless something has changed, the passing of the Finance Bill as I understand it (likely to be December 20th).
     
  10. Brendan Burgess

    Brendan Burgess Founder

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    I don't consider myself particularly left wing, but I was opposed to the way people are allowed give properties worth €40m to their children free of CAT.


    Brendan
     
  11. Gordon Gekko

    Gordon Gekko Frequent Poster

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    Hi Brendan,

    As was I. I believe a cap of €500k was the way to go.

    Regards,

    Gordon
     
  12. Mrs Vimes

    Mrs Vimes Frequent Poster

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    Maybe they should have changed it so that the dwelling house could exceed the CAT threshold without triggering a liability, but still use up the threshold?

    Case 1 - Qualifying house worth €700,000 left to one child - no CAT liability.
    Case 2 - Qualifying house worth €700,000 plus cash/shares worth €100,000 - CAT due on €100,000
    Case 3 - Qualifying house worth €300,000 plus cash/shares worth €100,000 - CAT due on €20,000

    Would also lead to abuse, but all reliefs due in one way or another and if the dwelling house relief is supposed to prevent a person being thrown out of their home to meet a CAT bill it would achieve that objective.
     
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  13. T McGibney

    T McGibney Frequent Poster

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    How many €40m properties are there in this country?

    The maxim "hard cases make bad law" comes to mind.
     
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  14. Gordon Gekko

    Gordon Gekko Frequent Poster

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    Unfortunately the relief was used for properties at that level.
     
  15. T McGibney

    T McGibney Frequent Poster

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    Last edited: Nov 30, 2016
    Yes (or at least so we're told), but how many times is this ever going to be in any way feasible ?
     
    Last edited: Nov 30, 2016
  16. Brendan Burgess

    Brendan Burgess Founder

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    Hi Tommy

    It's not really hard cases making bad laws.

    It was a bad law, and people exploited it.

    Brendan
     
  17. T McGibney

    T McGibney Frequent Poster

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    Hi Brendan

    Any law which protects cohabiting siblings and vulnerable adults from hardship arising from excessive or inappropriate taxation is never a bad law.

    I guarantee you this amendment will be repealed or substantially changed within 5 years.
     
    mtk likes this.
  18. Gordon Gekko

    Gordon Gekko Frequent Poster

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    Not many of course, but a couple of meaningful cases could yield significant funds for the Exchequer. Although, probably not, as the person doing the €100m property will just do something else.
     
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  19. SBarrett

    SBarrett Frequent Poster

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    The law has been tightened to protect the people it was originally intended to protect. If there are vunerable adults living semi-independently, they may inherit the family home as well as the second home. In most of these cases, parents will have put structures in place to look after these kids after their demise. It's not the government who should be blamed for this, it is the people giving their kids houses tax free that should.


    Steven
    www.bluewaterfp.ie
     
  20. T McGibney

    T McGibney Frequent Poster

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    No it hasn't. There are no provisions in the new legislation to mitigate the effect of the changes on vulnerable adults, cohabiting siblings and others who will be affected.