Revenue Ireland is almost certainly referring to a Capital Acquisitions Tax (CAT) charge on the “benefit” of free (or below-market) accommodation from the trust—not a classic employee Benefit-in-Kind (BIK) under income tax. The provided AI overview is broadly directionally correct but mixes terminology and needs some clarification based on official Revenue rules (as of 2026). I’ll break it down accurately, highlight disability-specific reliefs that can eliminate or greatly reduce the liability, and outline next steps. revenue.ie +1What Revenue is Charging & How It’s Valued

• When an adult child (not yet “beneficially entitled in possession” to the full property) lives rent-free in trust-owned property, Revenue treats this as an annual taxable gift/benefit under section 40 CATCA 2003 (free use of property).
• The benefit is deemed taken on 31 December each year (or the day before it ends). Value = market rental value for that year (less the €3,000 small-gift exemption per disponer).
• If the trust deed gives an explicit right of residence (common in wills), it is a limited interest. Revenue accepts a practical valuation of 10% of the property’s market value annually (or 20% if the trust also provides support/maintenance). You subtract any actual rent paid and claim the small-gift exemption. revenue.ie
• This is CAT (not income tax), charged at up to 33% on the excess after your Group A threshold (€400,000 lifetime from parents, plus aggregation rules). The trust (trustees) or the child may have filing/payment obligations.

It is not the same as employee BIK (which is irrelevant here unless trustees pay you as an employee, which they don’t).Strong Exemptions/Reliefs Because of DisabilityYour situation is much more favourable than a standard adult child case because of the permanent disability:

1. Section 82 CAT exemption – “normal & reasonable” support/maintenance
   Gifts or benefits provided to a child (any age) who is permanently incapacitated (physically/mentally unable to maintain themselves) for their support/maintenance are fully exempt from CAT.
   Free accommodation in a property set aside for this purpose is widely accepted as qualifying “maintenance”. Revenue’s own guide explicitly extends this to incapacitated children (unlike healthy adults over 25). revenue.ie
2. Discretionary Trust Tax (DTT) exemption (6% once-off + 1% annual)
   If the trust is (or can be shown to be) exclusively for a person incapable of managing their affairs due to physical/mental incapacity, it is fully exempt from DTT.
   Apply via MyEnquiries or your Revenue office with a medical certificate/evidence (e.g., Disability Allowance, medical reports). Many special-needs trusts from wills qualify. revenue.ie +1
3. Section 84 CAT – qualifying expenses of incapacitated persons
   Any benefit used exclusively for medical care, therapies, home adaptations, etc., is exempt. Accommodation enabling independent living can tie into this.
4. Dwelling House Exemption (section 86)
   Possible on a future absolute distribution/appointment of the property (if the child has lived there 3+ years as main residence, has no interest in any other dwelling, and continues living there). Less straightforward for a “second property” that was never the parent’s PPR or if held in trust, but worth checking with the trust deed. Gifts to dependent relatives (incapacitated) also qualify in some cases. revenue.ie
5. Other possible reliefs
   • LPT exemption or deferral for incapacitated owners/occupiers (medical evidence required).
   • If the trust qualifies as a “special trust” (rare—needs public fundraising element), full income/CGT exemptions apply, but DTT exemption above is more relevant here.

Key Actions You Should Take Immediately

1. Gather documents
   • Full copy of the will/trust deed (to confirm: fixed right of residence vs discretionary; any specific wording about the child’s entitlement).
   • Medical evidence (doctor/specialist letter confirming “permanently and totally incapacitated from maintaining himself/herself”).
   • Property valuation/rental estimate.
2. Engage professionals (do this first)
   • A solicitor specialising in trusts/estates + a tax advisor (ideally STEP-qualified or with Revenue CAT experience). They can:
     • Apply for DTT exemption.
     • Draft a response/claim to Revenue citing s.82/s.84.
     • Possibly restructure (e.g., appoint a life interest or confirm the trust as qualifying).
   • Cost is worth it—many cases end with zero tax via exemptions.
3. Deal with Revenue
   • File Form IT38 (CAT return) online via myAccount/ROS even if claiming full exemption—deadlines are strict (4 months from valuation date).
   • Reply to their notice within the timeframe, attaching claims + evidence. Ask for a “Revenue opinion” or meeting.
   • If DTT applies, file DT1 if not already done.
4. Practical next steps
   • Contact Revenue MyEnquiries (or your local office) referencing the specific notice.
   • Check Citizens Information or Inclusion Ireland guides on special-needs trusts—they align with the above.
   • Consider whether the child has any other property interest (this can block dwelling-house relief).

Disclaimer: This is general guidance based on Revenue.ie publications and the CAT Consolidation Act 2003 (current as of early 2026). Every trust deed and medical situation is unique—professional personalised advice is essential to avoid penalties/interest and secure the exemptions. Tax law changes and interpretations can shift; a qualified advisor can obtain binding confirmation from Revenue.If you share (anonymised) details like the exact wording in the will/trust or the Revenue letter, I can help refine this further. In the meantime, the disability angle gives you very strong grounds to push back successfully—many similar families end up paying nothing once the claims are properly made. Act quickly on the professional consultation.