Parent’s reservation of lifetime residence and income rights means property held in trust for tax purposes

The High Court found in favour of the appellant, holding that a property transferred by deed from a parent to their child remained 'settled property' for tax purposes because the parent reserved lifetime rights of residence and all income from the property, thus retaining the beneficial interest until their death or relinquishment. The court ruled that this arrangement constituted a trust, contrary to the findings of the Tax Appeals Commission and the Revenue Commissioners, who had treated the child as both legal and beneficial owner since the date of the transfer. The court determined that legal title passed to the child in 1986 but the benefit of the property did not, so the appellant was not liable for capital gains tax as originally assessed on the later sale; instead, the trust structure meant the tax liability would arise only when the parent's beneficial interest ended. The judge’s reasoning was heavily influenced by the factual distribution of sale proceeds and the nature of the reserved rights, and stressed that earlier Supreme Court authority on equitable life estates in Ireland still applied.