Valuation date and the value of benefits

Benefit charged on property.

On John's death his nephew Tom inherits his house. The will stated that John's sister Mary must inherit a right of residence in the house for her life. Mary was 60 years old when John died.

*Rental income on property if it was let.

Market value of benefit received by Mary:

€2,000 divided by €20,000 multiplied by €200,000 = €20,000

As Mary will only have this benefit for her life, the value of the benefit is multiplied by her age factor. You can find the list of age factors in Schedule 1, Capital Acquisitions Tax Consolidation Act, 2003.

Taxable value: €20,000 x 0.6475 €12,950

When Tom files his IT38 he can deduct the benefit received by Mary. For a right of residence he can deduct one-tenth, and for a right of residence, support or maintenance he can deduct one-fifth of the market value (of €20,000).

Benefit received when rights given to another person have ended.

The facts are the same as in the previous example, but Mary has died. Tom now receives an additional inheritance from John, as Mary's rights have ended and he has full ownership of the house.

market value of benefit received by Tom:

€3,000 divided by €30,000 multiplied by €300,000 = €30,000

*Rental income on property if it was let.

Under the aggregation rules the benefit of €30,000 will be added to the benefit Tom received when John died.