Jack Chambers (Dublin West, Fianna Fail)
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Capital Acquisitions Tax (CAT) is a tax which applies to both gifts and inheritances. For CAT purposes, the relationship between the person giving a gift or inheritance (i.e. the disponer) and the person who receives it (i.e. the beneficiary) determines the maximum amount, known as the “Group threshold”, below which CAT does not arise.

The Group A threshold is currently set at €335,000 and applies where the beneficiary is a child, including adopted children, stepchildren and certain foster children, of the disponer.

The Group B threshold is currently set at €32,500 and applies where the beneficiary is a brother, sister, nephew, niece or lineal ancestor or lineal descendant such as a grandchild of the disponer.

The Group C threshold is currently set at €16,250 and applies in all other cases.

In the case of long-term cohabitants who are not married or in a civil partnership, the relevant Group Threshold is the Group C threshold, which is €16,250. In addition to this, a CAT exemption may be available in relation to certain gifts and inheritances between long-term cohabitants.

Firstly, where a cohabitant inherits the family home from his or her deceased partner, he or she may be in a position to avail of the dwelling house exemption. To qualify for the exemption, the inherited property must have been the deceased cohabitant’s principal private residence at the date of his or her death. This requirement is relaxed in situations where the deceased person left the property before the date of death due to ill health; for example, to live in a nursing home. The inheriting cohabitant must also have lived in the house for 3 years prior to the date of the inheritance and must continue to live in the house for 6 years after that date. In addition, the inheriting cohabitant must not have a beneficial interest in another residential property.

In addition to the dwelling house exemption, gifts and inheritances taken by a qualified cohabitant in accordance with a Court Order made under Part 15 of the Civil Partnership and Certain Rights and Obligations of Cohabitants Act 2010 are exempt from CAT. Part 15 of that Act provides for a redress scheme whereby Court Orders can be obtained in certain circumstances in relation to the transfer of property. A “qualified cohabitant” is a person who has been in a committed and loving relationship with another person for a minimum period of 5 years (or 2 years where they are parents of one or more dependent children), whose relationship has ended due to death or separation and neither of whom was married to and living with another person in 4 of the 5 years immediately prior to the end of the relationship.

In relation to the specific reference to couples who are long-term cohabitants, it is important to note that differences in the tax treatment of the different categories of couples arise from the objective of dealing with different circumstances. Under the law, couples who have obtained legal recognition of their relationship status through marriage or civil partnership are not in an analogous situation to other cohabiting couples, which is why they are not accorded similar tax treatment to couples who have a civil status that is recognised in law. Any change in the tax treatment of cohabiting couples can only be addressed in the broader context of future social and legal policy development in relation to such couples.

Further information on the taxation of cohabiting couples can be found on the Revenue website, available at www.revenue.ie/en/life-events-and-personal-circumstances/marital-status/cohabiting-couples/index.aspx