On 1 January 2014, Owen transfers his house to Declan. He reserves the right to take back that transfer. Owen dies on 30 June 2017 without having used the power of revocation. After Owen dies the house is valued at €500,000. The value of the market rent from January 2014 to December 2017 is €20,000 per year.
Declan has the following benefits each year:
on 31 December 2014 a gift of €20,000 (as the rent for the property would have been €20,000)
on 31 December 2015 an inheritance of €20,000 (because Owen died in 2017, the gift of €20,000 has become an inheritance)
on 31 December 2016 an inheritance of €20,000 (as above)
on 30 June 2017 an inheritance of €10,000 (this is equal to six months’ worth of the €20,000 for rent for that year)
on 30 June 2017 an inheritance of €500,000 (this is the full value of the house Declan received).
Gifts become inheritances if the person dies within two years. The Small Gift Exemption still applies.