Credits you can claim against Capital Acquisitions Tax (CAT)
Prior tax on the same event
A person may give a gift or inheritance of a property to a life tenant. If they do, the life tenant then has a limited interest. The limited interest ends when the life tenant dies, and then a third party inherits the property in full. This third party, who is called the remainderman, becomes liable to CAT when he or she receives the property.
Some limited interests do not run their normal course. In these cases, the remainderman may have to pay CAT more than once on the same property. If this occurs, the tax which is due first is allowed as a credit against the tax which becomes due later.
If a limited interest does not run the normal course, a double tax may arise if:
- the remainderman sells on their interest in the gift or inheritance before the life tenant has died
- the life tenant releases their interest to the remainderman, or the remainderman releases their interest to the life tenant
- the remainderman and life tenant divide the property between them.