Inheritance taxes hamper property transfers, accountancy bodies warn
A number of the country’s leading accountancy bodies have called on the government to raise the inheritance tax threshold to help the next generation own family homes.
In its communication to the Commission on taxation and social protection, the CCAB-I coordination group noted that as house prices continued to rise, the low thresholds for the tax on capital acquisitions (CAT) and high CAT rates imposed a significant tax burden on those receiving gifts and inheritances. .
In 2009, a child could inherit or receive €542,544 from their parents before having to pay tax at the rate of 22%; today that amount is €335,000, with a significantly higher tax of 33% on higher values.
Crona Clohiesy, head of tax and public policy at Chartered Accountant Ireland, said if someone inherited a house worth €600,000 they would owe nearly €100,000 in tax.
“A lot of parents wouldn’t have that money readily available, so they would end up having to sell the house.”
“If you could raise those CAT levels and allow that property to pass from parent to child, then that child would get the house. Many real estate transfers are stopped because of the tax pressure.
She added that the inheritance and gift tax was only meant to target the really rich. “But because of the way the thresholds are, you get ordinary people falling into the tax net, which isn’t really fair..”