Barra Roantree "Was the Budget for the children of the rich or the children of the poor"

faketales said:
However there are probable many more situations where the son or daughter has significant savings and is more equipped to pay a tax bill than someone renting.
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A good friend of mine still lives with her parents in her early 40s.

Her only sibling moved out years ago and bought a house with his wife.

Both siblings in good careers with above-average incomes.

Seems bizarre that one would pay CAT on the parents’ estate of about €1m and the other won’t.
 
Dr Strangelove said:
A good friend of mine still lives with her parents in her early 40s.

Her only sibling moved out years ago and bought a house with his wife.

Both siblings in good careers with above-average incomes.

Seems bizarre that one would pay CAT on the parents’ estate of about €1m and the other won’t.
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Perhaps a case of the golden handcuffs at that stage. Although I imagine she could be waiting another 10 to 20 years.
 
Dr Strangelove said:
A good friend of mine still lives with her parents in her early 40s.

Her only sibling moved out years ago and bought a house with his wife.

Both siblings in good careers with above-average incomes.

Seems bizarre that one would pay CAT on the parents’ estate of about €1m and the other won’t.
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While it's their parents house it's her home, not his. The law cannot deal with every eventuality. What do you think the law should be in this situation?
 
I think this exemption was intended to help those who either stalled their life plans to care for elderly parents, or who were too vulnerable to be able to move out, and in both cases had little chance of having their own home. And it probably saved the state hospital and nursing home fees as having someone living in your home to care for it and you can have huge positive impacts. It was not intended for the edge cases where people move back in to avail of it, or where the economy has made it so hard to move out and set up your own life. Or for when relatively modest homes are worth 1m!
 
Uncapped reliefs are in almost all circumstances, a terrible idea. I think there could be some win/win in this idea exactly as @misemoi outlines above - but it’s quite obvious the unlimited nature creates extremely undesirable incentives economically and socially.

For vast swathes of the more expensive areas of Dublin, it is vastly more financially beneficial to structure your life to go after this relief than work a regular job, for example.
€1m-€2m is hard to earn net of income tax.

When you get to the likes of Ailesbury Road, the economic forces at play are absurd. 7 figures a year carers funded by the state.
 
Zion2022 said:
it is vastly more financially beneficial to structure your life to go after this relief than work a regular job
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Steady on!

I’m an only child and my parents’ estate might be €1m.

My CAT bill would be €200k and I’m sorry but it’s not worth selling my house and moving into their spare bedroom for what could be a few decades.
 
Dr Strangelove said:
Steady on!

I’m an only child and my parents’ estate might be €1m.

My CAT bill would be €200k and I’m sorry but it’s not worth selling my house and moving into their spare bedroom for what could be a few decades.
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If your parents estate is worth €5 million then it certainly might.
Anyway, you only have to live there for four years. That's €50k a year.
 
Dr Strangelove said:
Steady on!

I’m an only child and my parents’ estate might be €1m.

My CAT bill would be €200k and I’m sorry but it’s not worth selling my house and moving into their spare bedroom for what could be a few decades.
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If you were renting, earning say €30k a year and at best were hoping to buy a good distance from where you grew up and would like to live you may feel differently.

Based on age and situation you might not get a mortgage for the 200k should you want to move in.
 
Purple said:
If your parents estate is worth €5 million then it certainly might.
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It might, but this is <0.1% of properties.

Purple said:
Anyway, you only have to live there for four years. That's €50k a year.
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I’d have to accurately forecast dates of death and then remain resident for six years after.


I would cap dwelling home relief at something like €500k but the idea that lots of people plan their lives around the existing regime is fantastical.
 
Dr Strangelove said:
I would cap dwelling home relief at something like €500k but the idea that lots of people plan their lives around the existing regime is fantastical.
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Progressive property tax rates and progressive inheritance tax rates seem fairer, to me anyway, than progressive income tax rates.
 
Dr Strangelove said:
Steady on!

I’m an only child and my parents’ estate might be €1m.

My CAT bill would be €200k and I’m sorry but it’s not worth selling my house and moving into their spare bedroom for what could be a few decades.
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Not for everyone of course! But €200k is a lot of earned after tax income to a lot of people so I have no doubt some would make some extreme decisions to go after it in your case.

As the estates get bigger, the incentives get more and more tempting…which is why precisely the reason it should be capped at some reasonable level (however defined).

I don’t think anyone could sensibly argue this is a good relief in the extreme cases and it be could be addressed with a pen stroke.
 
Purple said:
I thought that the requirement to remain resident for 6 years was still in place.
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There are exemptions.

  • the house continues to be your only, or main, home for six years after the date of the inheritance. This does not apply if you:
    • are aged 65 years or over at the date of the inheritance
    • are required by reason of employment to live elsewhere
    • or
    • are required to live elsewhere because of mental or physical infirmity, and this is certified by a doctor.
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Zion2022 said:
I don’t think anyone could sensibly argue this is a good relief in the extreme cases and it be could be addressed with a pen stroke.
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Of course it is.

I know of someone who would be classed as vulnerable and who has lived his lifetime in one of the premium areas of Dublin 4, in the house that was previously the home of his late parents. Why should he have lost his home after his second parent died? He probably would have ended up homeless.
 
T McGibney said:
Of course it is.

I know of someone who would be classed as vulnerable and who has lived his lifetime in one of the premium areas Dublin 4, having previously lived there with his parents. Why should he have lost his home after his second parent died?
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Under the current rules he wouldn't but the argument for change is that he'd still be able to buy a different home with what will still be a very large transfer of unearned wealth.
 
Purple said:
Under the current rules he wouldn't but the argument for change is that he'd still be able to buy a different home with what will still be a very large transfer of unearned wealth.
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The chap is barely able to tie his shoelaces, let alone manage large sums of money or the purchase of a property.

Unearned wealth? The poor chap is incapable of earning anything and isn't wealthy. He just owns and lives in a house that would be very expensive to buy.
 
Purple said:
Yes, but those are exceptions so under normal circumstances it is correct to say that they'd have to remain in residence for 6 years after inheriting it.
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The post I replied to making that point didn't make that distinction.

The exceptions do provide a degree of flexibility and are presumably there for a reason.
 
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