Revenue Note for Guidance

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Revenue Note for Guidance

95 Replacements

Summary

This section provides that relevant business property that has replaced other relevant business property does not qualify for the relief unless the disponer, or his or her spouse, owned it and the replaced property taken together for at least 5 years out of the 6 years immediately preceding the gift or inheritance. In the case of an inheritance taken on the death of the disponer, the minimum period of ownership is 2 years out of the 3 years immediately preceding the inheritance.

Where the value of the replacement property is higher than that of the property replaced, the relief is restricted to what it would have been had the replacement not been made.

Details

(1) Any property which has replaced other relevant business property will qualify for relief if it and the replaced property are comprised in the disposition:

  • in the case of an inheritance taken on the death of the disponer, for at least 2 years out of the 3 years immediately preceding the date of the inheritance, and
  • in any other case, for at least 5 years out of the 6 years immediately preceding the gift or inheritance.

(2) Where the value of the replacement property is higher than the value of the property replaced, the relief is restricted to what it would have been had the replacement not been made.

Example

A drapery business had been sold for €100,000 and was replaced by a shop which was bought for €150,000. The shop was worth €180,000 on the relevant valuation date. The relief would be restricted as follows:

(3) For the purposes of subsection (2), changes resulting from the formation, alteration or dissolution of a partnership, or from the acquisition of a business by a company controlled (within the meaning of section 27 of the Act) by the former owner of the business, are disregarded.

Relevant Date: Finance Act 2015