Capital Acquisitions Tax Consolidation Act
In 2003, the government of Ireland passed the Capital Acquisitions act into law. The act brings together rules applying to the tax you must pay if you receive a gift of property from a living person or institution, and the tax you have to pay if you receive property as the result of an inheritance. You have to pay interest if you are late paying your gift or inheritance taxes, and the rate of interest is set out in the act.
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Gift Tax
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The capital acquisition tax is a tax on gifts you receive, and it is charged against you, not the person who gave you the gift. According to the act, you receive a gift that may be subject to a gift tax when you become legally entitled to possess the gift, enjoy the benefit of the gift and have the right to dispose of the gift. If you receive the gift upon the death of the previous owner, you do not have to pay a gift tax, as tax payable on the property contained in a deceased person's estate is subject to inheritance tax.
Inheritance Tax
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If you receive property as a result of the provisions contained in the will of a deceased person, you may be subject to an inheritance tax. If you become the owner of the property, inheritance tax applies when all, or part, of the property subject to inheritance tax is located in Ireland. If you are named as the beneficiary of property under the terms of a will and you decide to disclaim the property, you do not have to pay inheritance tax on that property. Disclaiming the property means that you declare that you do not want to receive and take ownership of the property.
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Property Valuation
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Government officials, known as commissioners, are responsible for assessing the value of property that may be subject to gift or inheritance taxes. Commissioners set a value on property as the price that they feel the property would achieve if sold on the open market. The commissioners assess the property value by taking into consideration a method of sale that would be likely to produce the best price for the vendor. For example, in estimating the value of real estate in a buoyant market, the commissioners may assess the price that the property might fetch at auction, taking advice from real estate professionals. The commissioners may appoint professional valuers to make an assessment of property values on their behalf.
Payment and Interest
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Capital acquisitions tax, whether it is levied as a gift tax or an inheritance tax, must be paid on the date that the value of the property is set. This date is known as the valuation date. If you do not pay the tax on this date, you must pay interest on the tax you owe, and according to Section 51 of the act, interest is set at 0.0322 percent per day. Interest is calculated as simple interest, meaning that the interest is only calculated each day on the amount of the tax that you owe, not the tax plus any previous days' interest.
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