CAT Category A Query

[fluffy47]

Group A also applies to parents who take an inheritance from their child but only where the parent takes full and complete ownership of the inheritance. If a parent receives an inheritance where he or she does not have full and complete ownership of the benefit, or if a parent receives a gift, then Group B applies.

If a parent inherits from their child, and have full and complete ownership of the inheritance it is exempt from tax if, in the previous five years, the child took an inheritance or gift from either parent and it was not exempt from Capital Acquisitions Tax. In this case, no tax needs to be paid even if the inheritance from the child is over the threshold.

Q1.If a parent gives a child a gift of 3,000euro to put toward a car in the past 3 years and this is the only financial lump sum that has been gifted in the past 10 years does this then make the parent exempt from paying tax on the inheritance ( full and complete ownership of the inheritance) .

Q2. If a parent is entitled to 'absolute inheritance' does this include the childs personal belongings eg. car etc...

Q3. If the car is listed in the will as the only item that should be passed on to someone else does that make the parent exempt from Category A?

Apologies in advance if the above appears to be a bit on the ambiguous. Hopefully someone will may be in a position to clarify one or two of my queries.

Thanks in advance.

 

[Branz]

Q1: Anyone can receive 3k from anyone per annum without any tax problems so if 3k is the amount then no issue.
Q2: the inheritance has to be valued for Tax purposes so it is either included or not
Q3: Whose will?

Exemptions [broken link removed]

Thresholds: http://www.revenue.ie/en/tax/cat/thresholds-rates-aggregation.html

 

[fluffy47]

Apologies, the will being the will of the child ( son or daughter), Q3.

 

[Joe_90]

Don't know where you are getting the reference from but there are two separate issues here.

1 there is an exemption from CAT where a parent takes an inheritance from a child to whom either parent has made a gift in excess of €3,000 in the prior 3 years.

If the inheritance is not exempt then group A threshold applies.

 

[fluffy47]

Q2. I understand that the inheritance has to be valued for tax purposes . With this being the case, what needs to be considered? The son/daughters home, a death in service payment, the value of their car, andy savings they may have had?

If the home ( son/daughters) has an outstanding mortgage with no mortgage protection in place is this considered when the inheritance is being valued?

If the inheritance is valued at less than 225k would this make the parent exempt from paying inheritance tax if they were considered to be eligible to be included in the Category A band?

 

[fluffy47]

Thanks Joe. I am probably confusing some issues. Sadly I am trying to understand something that I hadnt planned to do this Summer.

Basically, my parents gifted 3000euro to my sibling in the past 2-3 years ago which was used to put toward a car.

My sibling passed away recently and my mother ( father has since passed away) is to inherit all of his assets. I assume that once his home is paid for that the total of his assets will be less than 225k.

I am trying to understand if this might make her eligible for Category A consideration.

 

[Joe_90]

My condolences on your loss.

The €3,000 relates to an exemption it has nothing to do with Group A. Group A applies.

 

[Nige]

Q2. I understand that the inheritance has to be valued for tax purposes . With this being the case, what needs to be considered? The son/daughters home, a death in service payment, the value of their car, andy savings they may have had?

If the home ( son/daughters) has an outstanding mortgage with no mortgage protection in place is this considered when the inheritance is being valued?

If the inheritance is valued at less than 225k would this make the parent exempt from paying inheritance tax if they were considered to be eligible to be included in the Category A band?

The value of your mother's inheritance will be the net value of his estate, so all his assets less his liabilities (such as the mortgage) and funeral expenses.

If this figure is then less than €225k and your mother has not received any gifts/inheritances from her parents since December 1991, then it is below the threshold and no tax applies.

 

[fluffy47]

Sincere thanks to those who helped me to understand the situation we have found ourselves in. It is heartening to see how generous people can be with their expertise, knowledge and time.

F