Valuation date and the value of benefits

Free use of property and interest free loans

Free use of property

If you have free use of a property, or for less than its market value, you may have to pay Capital Acquisitions Tax (CAT) on it. 

A benefit is deemed to be taken on 31 December of each year that you have use of the property. However, if your free use of the property comes to an end, the benefit is deemed to be taken the day before the use ends.

You may be able to claim the small gift exemption on this benefit. For further information please see Small gift exemption. 

If you receive a gift in respect of free use of a property you may have to file a CAT IT38 Return. For further information please see Completing your Gift or Inheritance Tax Return.

  • Example 1

    Anne gives her cousin Colette the use of her house on 1 January 2022. The annual rent Anne could receive for the property is €15,000. Colette pays Anne rent of €5,000 per year.

    Colette is deemed to have received the following gifts in 2022 and 2023:

     - on 31 December 2022 a gift of €10,000 (market value of the annual rent (€15,000) less €5,000 rent paid).

    - on 31 December 2023 a gift of €10,000 (market value of the annual rent (€15,000) less €5,000 rent paid). 

    After allowing for the small gift exemption of €3,000, the net taxable value of each gift is €7,000. 

    On 30 June 2024 Colette moves out and her use of the property ends.

    On 29 June 2024 Colette is deemed to have received a gift of €5,000 (market value of the rent January to June (€7,500) less €2,500 rent paid).

    After allowing for the small gift exemption of €3,000, the net taxable value of the gift in 2024 is €2,000.

    Each gift is taken into account for aggregation purposes.

Interest free loans

If you receive an interest free loan, or if you pay interest but at a below-the-market rate, you may have to pay CAT on it.

A benefit is deemed to be taken on the 31 December of each year until the loan is repaid. Where the loan is repaid in full, the benefit is deemed to be taken the day before the repayment. The value of the benefit is the highest rate of return the funds would generate if they were invested on deposit, less any interest paid.

You may be able to claim the small gift exemption on this benefit. For further information, please see Small gift exemption.

If you receive a gift in respect of an interest free loan you may have to file a CAT IT38 return. For further information, please see Filing obligations for certain family loans.

  • Example 2

    Fiona gives a loan of €800,000 to her daughter Nicole on 1 January 2024. The highest rate of return Fiona could receive from investing the funds on deposit is 2%. Nicole pays interest on the loan at a rate of 1%.

    Nicole is regarded as taking a gift on 31 December each year, until the loan is repaid.

    The taxable value of Nicole's gift on 31 December 2024 is calculated below.

    Taxable value
    Details Values

    Loan value

    €800,000

    Multiply by highest rate of return (€800,000 × 2%)

    €16,000
    Less interest paid (€800,000 × 1%) (€8,000)

    Taxable value of the deemed gift

    €8,000

    After allowing for the small gift exemption of €3,000, the net taxable value of the gift is €5,000. Each gift is taken into account for aggregation purposes.

  • Example 3

    Joe gives a loan of €350,000 to his nephew John on 1 January 2024. The highest rate of return Joe could receive from investing the funds on deposit is 2%. John does not pay any interest on this loan.

    John repays the loan in full on 31 October 2024. John is regarded as taking a gift on 30 October 2024.

    The taxable value of the gift on 30 October 2024 is calculated below.

    Taxable value
    Details Values

    Loan value

    €350,000

    Multiply by highest rate of return:

    (€350,000 × 2%) = €7,000 

    €7,000÷ 365 × 304 days (1 January - 30 October) = €5,830

    €5,830
    Less interest paid Nil

    Taxable value of the deemed gift

    €5,830

    After allowing for the small gift exemption of €3,000, the net taxable value of the gift is €2,830. Each gift is taken into account for aggregation purposes.

Published: 17 February 2026 Print this page

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