Capital Acquisitions Tax Consolidation Act 2003 section 35

Enlargement of interests

Section 35 deals with the enlargement of a limited interest in property to an absolute interest, and how the taxable value of the enlarged interest is calculated for Capital Acquisitions Tax purposes.

• Where a person with a limited interest (e.g. a life interest) in property takes a further interest and becomes the absolute owner, the taxable value of the further interest is reduced by the value of the original limited interest.
• The value of the original limited interest is calculated using the Schedule 1 Rules, based on an interest in a capital sum equal to the incumbrance-free value of the property, running from the valuation date for the unexpired balance of the original term.
• The incumbrance-free value of the property is determined under section 28(1), as if the limited interest were taken as a taxable gift or taxable inheritance on the valuation date.
• This relief does not apply where the enlargement occurs under the same disposition that created the original limited interest.