Case Studies

Dwelling House Relief

'Dwelling House Relief' facilitates the passing of residential property free of capital acquisitions tax (CAT). In order for the relief to apply, the beneficiary must have continuously occupied the dwelling house as his or her only main residence throughout the period of 3 years immediately preceding the date of the gift or inheritance.

Where the dwelling house in question is replaced by another property, the 3-year residence requirement will be met where the dwelling house and that other property were occupied as the beneficiary’s only or main residence for 3 out of 4 years immediately preceding the date of gift or inheritance. The beneficiary must not at the date of the gift be beneficially entitled to any other dwelling house or to any interest in any other dwelling house. The beneficiary must continue to occupy the dwelling house as his or her only and main residence for a period of 6 years commencing on the date of the gift.

Case 1
In 1999, Mr. Smith purchased an apartment in Dublin, thereby providing a residence for his son Peter during his 4-year degree course, commencing on 1 September 2000. In September 2003, Peter decided to transfer to Cork University and Mr. Smith sold the apartment in Dublin and purchased a new apartment in Cork. In 2004, Mr. Smith gifted the apartment in Cork to Peter. The dwelling house relief would apply since the Cork property has replaced other property in which Peter has resided for at least 3 years, falling within 4 years immediately preceding the date of the gift.

Case 2
Property held under joint tenancy will pass by survivorship and will not pass under the terms of the willTwo brothers, Sean and Jim, inherited their home from their father as joint tenants. In his will, Sean left his share in the house to his niece, Mary. Sean predeceased Jim. Sean’s share in the property passed to Jim by survivorship, i.e. Jim was the surviving joint tenant. Thus, Mary did not benefit under the terms of Sean’s will.