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Valuation date and the value of benefits

  1. Overview
  2. What is the valuation date?
  3. Taxable value of a gift or inheritance
  4. Limited interest
  5. Factors used for calculating the value of limited interest
  6. Rights of residence
  7. Annuities and other periodic payments
  8. Free use of property and interest free loans

Limited interest

If you inherit less than the full, or absolute, ownership of a gift or inheritance, it is called a limited interest. You may inherit a limited interest for life or for a specified time.

The taxable value of a limited interest is less than the taxable value of a full or absolute ownership or interest in property. The taxable value of a limited interest is calculated based on two criteria.

In the case of a:

  • life interest, the age and gender of the beneficiary
  • specified period of time, the number of years for which the benefit is taken.

To calculate the taxable value of a limited interest, you must use the tables provided in Schedule 1, Capital Acquisitions Tax Consolidation Act, 2003. Tables A and B provide the factors for calculating the taxable value for:

  • a single life
  • joint lives
  • the longer of two or more lives
  • and
  • an interest that is guaranteed for a specified time.
  • Example 1 – Absolute interest

    Mary inherits €100,000 in stocks and shares on condition that she donates €15,000 to charity. The costs and expenses of the estate are €10,000.

    Taxable value of Mary's interest
    DetailAmount
    Market value of property €100,000
    Deduct costs and expenses €10,000
    Value €90,000
    Deduct donation to charity €15,000
    Taxable value €75,000
  • Example 2 – Life interest

    Brian is 37 years old. He takes a life interest of investments valued at €500,000 from Carmel on condition that he pays Carmel's niece €2,000. The costs are €1,200. 

    Brian will need to use Table A on 'Factors used for calculating value of limited interest' page.

    Taxable value of the Brian's interest
    DetailAmount
    Market value €500,000
    Deduct costs €1,200
    Value €498,800
    Multiply by age factor for male 37 years (0.8626) €430,265
    Deduct payment to niece €2,000
    Taxable value €428,265
  • Example 3 – Interest for a specified time

    Michael transferred a house to his brother Alan until his niece, Lucy, reaches 21 and the house will be hers. She will be 21 in five years and 99 days. The market value of the house is €100,000. Costs paid by Alan are €3,000.

    Alan will need to use Table B on ‘Factors used for calculating value of limited interest’ page.

    Taxable value of Alan’s gift
    DetailCalculationAmount
    Market value   €100,000
    Minus costs    €3,000
    Value    €97,000
    Calculate for 5 years:    
    Multiply value by factor for 5 years (.2869) .2869  €27,829
    Calculate for the 99 days:    
    Multiply value by factor for 6 years (.3335) €97,000 x .3335 = €32,350  

    Deduct the value for 5 years

    		 €32,350 - €27,829 = €4,521  
    Divided by 365 and multiplied by 99  (€4,521/365) x 99 €1,226
    Taxable value  €27,829 + €1,226 €29,055

Next: Factors used for calculating the value of limited interest

Published: 04 May 2023 Print this page

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