Revenue by means of ebrief 163/22 of the 1st of September 2022 has issued consolidated guidance on the treatment of rights of residence. Essentially an exclusive right of residence is treated as a life interest. A non-exclusive right of residence is treated differently depending on whether it is accompanied by rights of support and maintenance. In short, you can treat a non-exclusive right of residence as having a value of 10% of the property or 20% if there is a right to support and maintenance. There is an alternative method of calculating the non-exclusive right of residence and this is outlined in the manual. Also where a person receives a non-exclusive right of residence, the 10% or 20% value in their hands, is further reduced by the life factor table at Schedule 1 of the CATCA 2003. This is known as the “slice principle”

It is very useful having these rules in one location. Further, these issues should be taken into account in voluntary transfer situations. Particularly where a child may have used up a good portion of their threshold already, the fact that a right of residence reduces the value of an asset into the hands of a beneficiary may reduce that beneficiaries’ overall tax liability on the gift.

I attach a link to the new Revenue manual.

https://www.revenue.ie/en/tax-professionals/tdm/capital-acquisitions-tax/cat-part25.pdf

I hope this helps and if you have any tax, will drafting or probate queries, please email me at ckelly@hcalaw.ie