# Is inheritance tax effective on date of death or final probate? Budget changes?



## Torpedo (2 Nov 2012)

Hi guys

Mum sadly passed away very recently. Very organised she had a will etc in place.

her house (>250k) and a bond maturing 2014 is going to me and I'm executor of will. Solicitor is putting it to probate next week and expecting a 2 month completion of probate.

Question I have is inheritance tax effective on date of death or final probate? (With upcoming budget, threshold maybe reduced so concerned I'll get hit with a higher tax bill.)

Also If I have the house valued at x and end price is higher than x assume I pay the difference as CAT?

Finally bond in 2014 do u pay tax on current value as of 2012?

Any help much appreciated...


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## Padraigb (3 Nov 2012)

Capital Acquisitions Tax is levied on inheritances, and is calculated on the value of the estate at date of death. The threshold applicable at that applies.

Yes, you can be subject to tax if the house sells for more than the valuation at which it was transferred to you. The tax applicable is Capital Gains Tax.

The bond should be valued on the basis of its encashment value at date of death.


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## Torpedo (3 Nov 2012)

Thanks Padraig, was nervous the upcoming budget was going to affect it.

cheers


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## morei (16 Nov 2012)

So if the bond is worth less on its final date than on the date of death, do you still end up paying the tax on the higher value even if you don't actually get it??
Did lots of people get burned in 2008 when everything went down?


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## Vanilla (17 Nov 2012)

Padraigb said:


> Capital Acquisitions Tax is levied on inheritances, and is calculated on the value of the estate at date of death. The threshold applicable at that applies.


 
This is not quite right. The threshold and rate of tax IS based on the date of death but the valuation used is that at the valuation date which can be a different date. It could be the date of death, or the date of the grant or the date the beneficiary becomes beneficially entitled. It depends on the circumstances.


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## Joe_90 (17 Nov 2012)

In fairness to the OP would the valuation date be the date of death in the case of these specific bequests?


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## Vanilla (19 Nov 2012)

Joe_90 said:


> In fairness to the OP would the valuation date be the date of death in the case of these specific bequests?


 
No, actually in many/most cases it will be the date of the grant, but there can be an element of cherrypicking the most favourable date.


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## Joe_90 (19 Nov 2012)

So if the OP delays getting the grant of probate then they can delay having to pay Capital Acquisitions Tax?

Are they not beneficially entitled on death in the case of a specific bequest?

[broken link removed]


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## Vanilla (19 Nov 2012)

Didn't you just answer your own question with that link? It depends on the asset but also on the circumstances.

For eg, Joe inherits some land. He is not entitled to go into possession in law until the grant is extracted and the property transmitted to him. Here the grant will be the valuation date. However IF Joe HAD gone into possession of the land and started farming it immediately after the death of the donor,  Revenue might say he immediately became beneficially entitled in possession and therefore would argue the date of death was the valuation date. But there might be a massive Revenue audit which went on beyond the date of the grant or a court case which delayed transmission and Joe might not have gone into possession until a year after the grant. In that case he might argue the valuation date was the later date. Obviously Revenue might or might not agree. 

In practice, as long as someone isn't obviously delaying without good cause, Revenue accept either the d.o.d. or the d.o.g. as the valuation date.


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## bonny (21 Dec 2012)

I am in a similar situation. Dad died last July and the estate is still under probate. I can confirm thresholds and tax rate are applied to the date of death. Valuation dates can be post budget and not affect the rate of CAT applied.
Bonny


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