# Inability to cover inheritance tax bill



## byrnekbyrne (9 Jun 2019)

Hi folks

Take this hypothetical scenario 

Person A living in relatives home for two years, relative passes away and wills house to person A, tax bill of 250000 is triggered, person A can only borrow/raise 125000 at a max to put against tax bill.

Can Revenue evict person A from the home if they cannot cover rest of tax bill, Person A would be willing to come to arrangement with Revenue but realistically would take a lifetime to pay off the difference. 

Bottom line can Revenue evict someone for being unable to fully meet their inheritance tax bill?


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## Palerider (9 Jun 2019)

Not such an unusual situation but that is a high tax bill, assuming person A is not a son/daughter, if person A cannot meet the tax then the property would usually be sold at which point person A could meet the liability.

What is the value of the house.


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## byrnekbyrne (9 Jun 2019)

Palerider said:


> Not such an unusual situation but that is a high tax bill, assuming person A is not a son/daughter, if person A cannot meet the tax then the property would usually be sold at which point person A could meet the liability.
> 
> What is the value of the house.



I guess what I’m getting is can they force you to sell your home or evict you if one refuses to sell? As, in this scenario it would be person A’s only home.

 Would they accept putting some sort of judgement against the house rather than evicting, can they evict?

On the scenario above the value would be approx 850000


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## Gordon Gekko (9 Jun 2019)

Revenue would look at a payment plan in such circumstances.

If the person paid €125k upfront, he or she could then rent-a-room and throw that €14k to Revenue for 5 years plus, say, another €950 a month which is a lot less than anyone else’s mortgage or rent for such a property.

If the person is unable or unwilling to do that, they should downsize.


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## byrnekbyrne (9 Jun 2019)

Gordon Gekko said:


> Revenue would look at a payment plan in such circumstances.
> 
> If the person paid €125k upfront, he or she could then rent-a-room and throw that €14k to Revenue for 5 years plus, say, another €950 a month which is a lot less than anyone else’s mortgage or rent for such a property.
> 
> If the person is unable or unwilling to do that, they should downsize.



Appreciate the replies, leaving aside what would be the sensible thing to do by Person A, can Revenue legally force sale/evict if they cannot recover full inheritance tax bill?

 Also it’s a good point you make re rent a room scheme however do Revenue agree to go beyond five years in making agreements to recover the debt, as in if Person A couldn’t pay full debt off in five years but would be able to in let’s say in ten years? Is there any room to go beyond the five years with Revenue?


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## Palerider (9 Jun 2019)

Your question is very specific and should really  be directed to Revenue, all we can dois speculate unless someone has direct experience of course, as stated above the property can be sold to satisfy the inheritance tax with lots left to acquire an alternative home and that would be my sensible approach.


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## Gordon Gekko (9 Jun 2019)

In my experience, they won’t go longer than five years. I’ve also seen cases where they apply a pragmatic approach with older people and get a judgement mortgage.

However, this thread seems to be less about a real query and more about intellectual masturbation. I’m out.


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## byrnekbyrne (9 Jun 2019)

Gordon Gekko said:


> In my experience, they won’t go longer than five years. I’ve also seen cases where they apply a pragmatic approach with older people and get a judgement mortgage.
> 
> However, this thread seems to be less about a real query and more about intellectual masturbation. I’m out.



You have that wrong, not Intellectual masturbation, rather a possible scenario that could be faced by someone I know in the near future and reluctant to give specifics, my question was wheter Revenue can legally evict you from your only residence/sell from under you if you cannot pay a hefty inheritance tax bill within a required time frame if a person digs in and refuses to sell their only home.

I understand the simple answer is to sell but I’m trying to get a sense of how far Revenue can legally go on matters like this as in can they put you on the street.


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## jpd (9 Jun 2019)

Revenue are not putting a person on the street, once the property is sold and the inheritance tax paid, there is still enough left to purchase a new home - maybe not as big or as well situated as the current property, but that's a question of choice


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## byrnekbyrne (9 Jun 2019)

jpd said:


> Revenue are not putting a person on the street, once the property is sold and the inheritance tax paid, there is still enough left to purchase a new home - maybe not as big or as well situated as the current property, but that's a question of choice



But the crux of my question is IF the person refuses to sell for let’s say sentimental reasons, been in family for generations etc etc, government not taking our home etc etc what then, trying to remove from my question what would be right or wrong decision in this situation for person A and rather trying to ascertain can Revenue legally enforce a sale.


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## noproblem (9 Jun 2019)

The right decision would be for the person to pay revenue. Sentimentality and the Revenue are not a good mix. The person got the house and refuses to pay the tax bill, for whatever reason, it doesn't matter. In that scenario the person is saying to revenue they are not going to pay them. I would think the revenue will then, if they are given no choice, "eventually" sell the house and in my opinion be 100% right to do so. Too many half smart people in this country at the moment who haven't done their homework and want someone else to copy from.


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## torblednam (9 Jun 2019)

This situation shouldn’t actually arise, if people with valuable assets actually care enough to undertake proper estate planning. But anyway...

If a person engages constructively and is willing to enter a non-statutory arrangement for payment of the tax liability over the shortest period that their means allows, AND consents to a judgement mortgage against the property, that’d be acceptable to Revenue.

Forcing sale of anyone’s PPR in this country is as difficult for Revenue as it is for any other creditor.

Revenue’s published Tax & Duty manual for CAT sets out some of the details around instalment arrangements (paragraph 14 of this: https://www.revenue.ie/en/tax-profe...cat-collector-general-district-guidelines.pdf). Gordon has mentioned 5 years as the limit above but that relates to statutory arrangements which are actually legislated for. Revenue has discretion to facilitate longer periods as necessary.


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## byrnekbyrne (9 Jun 2019)

torblednam said:


> This situation shouldn’t actually arise, if people with valuable assets actually care enough to undertake proper estate planning. But anyway...
> 
> If a person engages constructively and is willing to enter a non-statutory arrangement for payment of the tax liability over the shortest period that their means allows, AND consents to a judgement mortgage against the property, that’d be acceptable to Revenue.
> 
> ...



Thank you for that detail, that’s what I was looking for, and finally absolutely if this situation does arise the person should sell home and pay bill but I was trying to establish worst case scenario and it’s not a case that they would be unwilling to pay Revenue but wouldn’t possibly be able to clear full debt in a matter of 5 years but certainly doable in 10 years, it sounds crazy but they have a very strong sentimental attachment to the home and can forsee it going this way if this situation does arise. They would rather go into financial ruin and struggle just to keep the family home.  Thanks again for that detail.


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## Gordon Gekko (9 Jun 2019)

Who can’t afford €1,000 a month if it meant no rent or mortgage?

This potential deadbeat should pay his or her debts in a timely manner or be forced to sell the property.


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## byrnekbyrne (9 Jun 2019)

Gordon Gekko said:


> Who can’t afford €1,000 a month if it meant no rent or mortgage?
> 
> This potential deadbeat should pay his or her debts in a timely manner or be forced to sell the property.



Amazing how asking for some friendly advice on the internet can get toxic very quickly,in this situation Person A would not get a mortgage to pay full tax bill, only partial and with mortgage and savings still would have a balance of  approx 100k/125k owing which would be impossible to meet on top of mortgage payments within five years therefore in worst case scenario was enquiring as to what flexibility was there. Anyway I’m out, thanks all for helpful replies.


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## Gordon Gekko (9 Jun 2019)

With respect, you weren’t seeking help. You wanted advice to enable someone to play ducks and drakes with Revenue...someone with plenty of assets. That’s no worse than a high profile builder hoodwinking NAMA.


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## byrnekbyrne (9 Jun 2019)

Gordon Gekko said:


> With respect, you weren’t seeking help. You wanted advice to enable someone to play ducks and drakes with Revenue...someone with plenty of assets. That’s no worse than a high profile builder hoodwinking NAMA.


With respect, I disagree, I was seeking advice as to whether Revenue in a rare circumstance such as above would consider a period longer than five years to allow somebody to clear their debts rather than be forced to sell a home that’s been in a family for a long period of time, and it appears there is a facility for non statutory payments which I’m sure individual would gladly take even if there is high interest rates charged and it went on for how many number of years to fully clear the debt, it’s not about hoodwinking rather foolish sentimentality to hang on to a family home, there wouldn’t be hoodwinking as a Revenue audit would give them a full picture of the persons repayment capacity, quite a bit different than a high profile builder hoodwinking nama, good luck to you.


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## Bronte (10 Jun 2019)

Gordon Gekko said:


> With respect, you weren’t seeking help. You wanted advice to enable someone to play ducks and drakes with Revenue...someone with plenty of assets. That’s no worse than a high profile builder hoodwinking NAMA.


I think that’s unfair based on what the poster asked. He’s looking for tax advise.

Personally though I think one would be nuts to take on a mortgage and commit to every spare penny going to revenue in order to hang onto a house.  What benefit does the OP see from that option now and down the line.  That’s a more pertinent question the OP didn’t ask. And he ignored Mandelbrot’s point about estate planning. To avoid the situation he now finds himself in.


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## Gordon Gekko (10 Jun 2019)

I disagree. The advice being sought is whether someone can dig in and remain in the property despite owing the tax. It’s analagous to someone asking whether a bank can force them to sell their home when they’re in default. Deadbeats should pay their debts.


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## jpd (10 Jun 2019)

In essence, the OP was asking whether the tax payers would their relative's emotional attachment to the family home, presumably until such time as he/she died and the tax still due was then paid from the proceeds of the estate - assuming that there would be proceeds left.
I'm inclined to side with Gordon on this one - after all, I have an emotional attachment to having long trips to exotic places but I wouldn't expect the tax payer to fund these


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## NoRegretsCoyote (10 Jun 2019)

A house of that value is likely to be old and require substantial upkeep.

Has your 'friend' factored that in?


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## torblednam (11 Jun 2019)

jpd said:


> In essence, the OP was asking whether the tax payers would their relative's emotional attachment to the family home, presumably until such time as he/she died and the tax still due was then paid from the proceeds of the estate - assuming that there would be proceeds left.
> I'm inclined to side with Gordon on this one - after all, I have an emotional attachment to having long trips to exotic places but I wouldn't expect the tax payer to fund these



The taxpayer isn’t footing the bill though, not really, and certainly not in this case, given the high value of the property. 

A first legal charge will be taken over the property, and the tax liability plus accrued statutory  interest (at a tasty enough rate), will be recovered on any subsequent sale of the property or from the estate if necessary.


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## Bronte (11 Jun 2019)

torblednam said:


> the tax liability plus accrued statutory  interest (at a tasty enough rate)



Than the OP would be mad to consider this.  And the other posters were incorrect. Revenue will get it's pounds worth and the taxpayars will be delighted.


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## jim (11 Jun 2019)

I think Gordons posts are judgemental and childish. The op had a specific question he wasnt looking to be judged. If you cant be constructive no need to be rude and bordeline abusive ie. referring to the OP as a "deadbeat".


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## torblednam (11 Jun 2019)

Bronte said:


> Than the OP would be mad to consider this.  And the other posters were incorrect. Revenue will get it's pounds worth and the taxpayars will be delighted.



I think the interest runs at about 8% p.a.


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## RedOnion (11 Jun 2019)

torblednam said:


> A first legal charge will be taken over the property,


This is where it might not work. OP is talking about both a mortgage & a deferred tax payment. So, it would have to be a 2nd legal charge as bank will only lend on 1st charge. Or, forget the mortgage, and have Revenue accrue at 8% on the entire amount. If 125k is max a bank would lend, it's unlikely the person could pay anything material above the 8% interest, so unlikely Revenue would entertain if there's no realistic way of the money being repaid in foreseeable future?


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## Pugmister (11 Jun 2019)

Engage the services of a good tax advisor would be my advice. My mother has just been through a similar situation and we had a tax advisor who deals with revenue on a regular basis conduct all communication on our behalf. We found them extremely fair to deal with and once all facts were established revenue even offered us more favourable payment terms than what we were originally seeking.

I am a qualified accountant and knew how to handle this myself but felt by engaging the services of a specialist who knows exactly how to phrase things when speaking to revenue was the best option. Overall very satisfied with the outcome.


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## torblednam (11 Jun 2019)

RedOnion said:


> This is where it might not work. OP is talking about both a mortgage & a deferred tax payment. So, it would have to be a 2nd legal charge as bank will only lend on 1st charge. Or, forget the mortgage, and have Revenue accrue at 8% on the entire amount. If 125k is max a bank would lend, it's unlikely the person could pay anything material above the 8% interest, so unlikely Revenue would entertain if there's no realistic way of the money being repaid in foreseeable future?



I was kind of working off the assumption that the bank wouldn’t actually lend 125k to someone, knowing that it’s going towards a tax bill and the person will still owe the same again in tax...! 

Overall it’s an insanely expensive way to deal with a situation that need not actually arise.


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## Gordon Gekko (11 Jun 2019)

jim said:


> I think Gordons posts are judgemental and childish. The op had a specific question he wasnt looking to be judged. If you cant be constructive no need to be rude and bordeline abusive ie. referring to the OP as a "deadbeat".



You should probably read the posts properly before commenting on them. I did not refer to the OP as a deadbeat. I referred to the person who might seek to frustrate Revenue as a deadbeat. Your comments around the constructiveness or otherwise of my posts are also bizarre; I attempted to assist and only switched tack when it became clear that the OP was looking for a deadbeat’s playbook. It is a cousin of asking “how can I borrow money to buy a home and not pay it back?”


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## jim (11 Jun 2019)

Instead of answering the OPs question Gordon you are chatising him. 

You use silly phrases like "Intellectual masturbation" followed by "im out", implying that you no longer had a contribution to make to the thread but you then proceed to abuse the individual concerned (a relative or friend of the OP I presume) referring to them as a "deadbeat".

Its just a toxic contribution that goes nowhere towards answering the OPs specific question; however averse you might be to the wider context of the OPs situation.

Why not just answer the question if you can and hold back with the judgement.


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