On 1 January 2014, Eoghan transfers his house to Declan. He reserves the right to revoke that transfer. However, Declan has free use of the property. Eoghan dies on 30 June 2017 without having exercised the power of revocation. After Eoghan 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 Eoghan 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 (six months of the annual rent of €20,000)
on 30 June 2017 an inheritance of €500,000 (this is the full value of the house Declan received).
A gift becomes an inheritance where the date of the gift is within two years prior to the death of the disponer. The Small Gift Exemption still applies in this instance.