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Transfer of Assets by Gift or Inheritance

If you are seeking to transfer your assets by way of a gift or inheritance to another person, it is vitally important to obtain expert legal advice before doing so.

Our Wills, Probate & Estate Planning Team have in-depth legal expertise and know-how regarding the financial and tax implications to advise you on the best possible options given your circumstances. By doing so, you can be assured the process will be completed smoothly, and no unexpected consequences will be encountered at a later date.

What are the Tax Implications of Transferring Assets by Gift or Inheritance?

When transferring assets by way of gift it is important to note that there are a number of tax consequences that can arise from that single transaction (e.g. stamp duty, Capital Acquisitions Tax and Capital Gains Tax). It is also important to note that lifetime transfers of property can result in tax consequences for the donor (person giving the gift).

Under present legislation, the Capital Acquisitions Tax (Consolidation) Act 2003 (as amended), gifts and inheritances between Spouses and Civil Partners are not subject to Capital Acquisitions Tax ("CAT"), and likewise, if the asset being transferred is a property, no Stamp Duty will be due. It is important, however, to know that if co-habitants are not married or in a civil partnership, CAT relief will not apply.

What are the other Implications of Gifting your Home?

For most people, their home is their most valuable asset. This is especially so given the rapid growth in house prices in recent decades. You may have decided in good faith to gift your own home to a loved one, but there are implications which you should be aware of before doing so.

You will need to decide whether the gift should be made outright to the individual/s in question or to a trust. While all may be amicable now, it is important to think about what would happen to you in the event of a disagreement which means you are forced from your own property. There are also implications for the person receiving the gift, as they may lose entitlement to state benefits as a result.

You also should consider what would happen if the person you are gifting your home to dies before you; who would then inherit the property?

The current rate of Capital Acquisition Tax ("CAT") in Ireland, also known as Inheritance Tax or Gift Tax, is 33% on all gifts or inheritances which exceed your tax-free threshold.

Some inheritances or gifts are tax-free; there are three different thresholds depending on the relationship between the recipient and the disponer (the person making the gift or bequeathing the inheritance), as follows:

Group A: Tax-free threshold of €400,000 which applies where the beneficiary is a:

Child (including an adopted child, and stepchild) of the disponer or the disponers civil partner
A foster child of the disponer in certain circumstances
Minor child (under 18 years of age )of a deceased child of the disponer or the disponers civil partner
Parent where they take an absolute inheritance following the child’s death in certain circumstances
Niece or nephew where Favourite Nephew or Niece relief applies

Group B: Tax-free threshold of €40,000 which applies where the beneficiary is a:

Parent where threshold A does not apply
Brother or sister
Nephew or niece
Lineal ancestor or lineal descendant of the disponer, such as a grandparent or grandchild.

Group C: In all other cases the tax-free threshold is €20,000.00.

Capital Acquisition Tax is payable:

Where the disponer is Irish resident, any worldwide assets gifted or inherited
Where the beneficiary is Irish resident, any worldwide assets gifted or inherited
Where neither the disponer nor the beneficiary is resident, Irish situate assets only

CAT is not payable on a gift or inheritance if it is:

Given to you by your spouse or civil partner
The total is below the group threshold amount (when its value is added to previous gifts and inheritances in the same group)
The first €3,000 of a gift in a calendar year from a disponer is exempt from CAT – this is known as the small gift exemption

Where the parties to a transaction do not meet on equal terms, where for instance one of the parties to the transaction is vulnerable due to age, infirmity, mental health issues and capable of being taken unfair advantage of, the Court may in such circumstances set aside the transaction.

It is essential in these circumstances that both parties are independently advised and that the vulnerable party fully understands the consequences of his or her actions of gifting or disposing of their property at an undervalue.

Where a person gifts property during their lifetime (donor) to a person with whom they are have a relationship of trust, such as parent to child, this can create a presumption of duress which if upheld gives rise to the transaction being deemed to be void. It is essential in such circumstances that both parties to the transaction are independently advised.

A presumption of duress does not arise where a property is bequeathed to someone, only in lifetime transaction by the donor.

Where a couple live together (whether opposite sex or same sex) for a specified period of time, in an intimate and committed relationship, and that relationship ends through death, and no provision has been made by will of the deceased co-habitant for the surviving co-habitant, which surviving co-habitant was dependent on the deceased co-habitant, an application to Court for a redress order may be made against the estate of the deceased co-habitant.

If a redress order is made, the surviving co-habitant receives the redress property free of Capital Acquisitions Tax ("CAT").

If the benefit received is not from a spouse or civil partner, or on foot of a co-habitants redress order, CAT of 33% is payable on gifts and inheritance in Ireland; however tax-free thresholds will apply depending on the precise circumstances and the relationship between the beneficiary and the person passing on the gift / inheritance (the disponer).

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Why choose Lavelle Partners for a Transfer of Assets?

Our award-winning Wills, Probate & Estate Planning Team led by Caitriona Gahan are highly experienced in advising families and professionals on estate planning, will structuring, administration of estates, capital acquisitions tax and discretionary trust tax issues.
We are well-versed in the legal, financial and tax implications of transferring assets by gift or inheritance.
the business of administering an estate and can quickly identify issues before they cause a delay to the grant of representation.
We are known for our dedication and our compassionate, empathetic approach to clients in dealing with sensitive private matters such as Wills and Probate.
Lavelle Partners won Probate Law Firm / Team / Lawyer of the Year at the Irish Law Awards 2024, as a testament to the calibre of our expertise and first-rate client service.
As a full-service law firm, our clients benefit from our combined legal expertise in a number of related specialist areas including Corporate & M&A, Employment, Property and Litigation & Dispute Resolution.

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“The team at Lavelle Partners are innovative and helpful in every way, from the point of contact to the final draft of work completed. Always looking for the best way forward.”