As with everything, getting a gift or inheritance comes with tax implications. In general, the person receiving the gift / inheritance will be subject to Capital Acquisitions Tax on its value. The rate of tax is currently 33%.
However, there are some reliefs to reduce the tax burden in certain circumstances. The most common reliefs are set out below.
You only become taxable on the gift/inheritance received if the value of the total assets received in your lifetime from a particular group exceeds that groups threshold.
- Group A - a gift / inheritance from a parent - you can receive up to the value of €225,000 tax-free.
- Group B - a gift / inheritance from a son, daughter*, brother, sister, uncle, aunt or grandparent - you can receive up to the value of €30,150 tax-free.
- Group C - a gift / inheritance from anyone else - you can receive up to the value of €15,075 tax-free.
Small Gift Exemption
Every individual can receive a gift of up to €3,000 per year from any one person completely tax-free. So get out there and start asking everyone for €3,000, you might just make a nice sum from it without paying any tax!
If a gift is covered by this exemption, that gift does not reduce your lifetime threshold, as outlined above.
If you receive a gift / inheritance of agricultural assets, you may be entitled to this relief. Basically, if you qualify for the relief, the value for tax purposes will be reduced by 90%. Massive savings can be achieved if planned correctly.
Similar to agricultural relief, the value of the qualifying assets received as a gift or inheritance may be reduced by 90% for tax purposes. Again, there are plenty of conditions that must be satisfied but, with planning, the transfer can take place in a tax-efficient manner.
Favourite Niece / Nephew
This relief works to allow a niece / nephew avail of the higher Group A thresholds when receiving a gift / inheritance of business assets from an uncle / aunt. There are conditions that need to be satisfied to qualify.
Dwelling House Exemption
A person can receive a gift / inheritance of a house completely tax-free providing certain conditions are fulfilled. Basically, the person receiving the house must have lived in the house for three years prior to receiving it and must not own, or be entitled to, another dwelling house. The person giving the house must also have owned the property for the previous three years.
If you have received a gift / inheritance recently, or if you are planning one, get in touch to discuss the most tax-efficient way of receiving it. Otherwise, start sucking up to all your friends and family to see if they'll hand over that €3,000 tax-free!