CAT exemption on increase of value from probate to sale date.

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aofe hayes

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Would any one have any advice please regarding CAT and if an exemption is possible in the case of my sister who moved in with our Dad to care for him for the last years of his life. She left a permanent job and moved out of her own house which she has a mortgage on to do so. Our Dad left instructions for the house to be sold and for the proceeds to be divided amongst us all with a larger share going to my sister. The house is now being sold and the value of the house has increased slightly since the probate valuation. We are wondering if there is CAT payable on the difference or if she is exempt as as she has lived there permanently for 10 years now. Is it straightforwad or do we need talk to a solicitor or an accountant about this?
 
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I don't think that there is any such exemption.

There are some exemptions from CAT for people who inherit houses but not from CGT

Brendan
 
Thank you Brendan. I think we got confused and meant CAT. Do you think she might be exempt as she had to move in to care for Dad as it was the only way he could be discharged from hospital. She still had her own house but couldn’t live there as he was incapacitated and needed full time live in care so his house became her primary residence and has been since he passed.

If she is due to pay it can the funeral bill be offset against it and the cost of repairs and maintenance to it which she looked after before and since

Any advice of who we should talk to would be appreciated
 
Now you have me confused.

Each of the beneficiaries will be subject to CAT on the value of their inheritance. The threshold is €335k (?) so if it's below that there is no CAT.

If the property increased in value from the date of death to the date of sale, the Executor will be liable for CGT.

It's very complicated, and the above is a summary. Any accountant or the solicitor helping with the probate should know.

Brendan
 
Thank you Brendan and Clubman. Sorry for the confusion. Each beneficiary is receiving less than the threshold as it’s a very modest estate which is why we were hoping our sister who is the executor and the largest beneficiary would be exempt from any tax on the increased value. The Solicitor handling everything could not advise her.
 
aofe hayes said:
which is why we were hoping our sister who is the executor and the largest beneficiary would be exempt from any tax on the increased value.
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Brendan already addressed this issue.
Brendan Burgess said:
If the property increased in value from the date of death to the date of sale, the Executor will be liable for CGT.
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The solicitor dealing with the probate and/or conveyancing really should know at least the basics of the tax issues even if they're not tax advisors.
 
Agreed Clubman. But unfortunately when asked offered her no clarity only advised to seek advice elsewhere on it hence my questions.
 
aofe hayes said:
Agreed Clubman. But unfortunately when asked offered her no clarity only advised to seek advice elsewhere on it hence my questions.
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You need to talk to an accountant or tax consultant. Your solicitor is fully correct to refrain from offering tax advice unless she has sufficient expertise in tax. These days most solicitors don't. AAM as an online discussion forum is not an appropriate substitute for professional advice.
 
In my several direct and indirect experiences with solicitors and probate or conveyancing they have always outlined (not advised on) the tax issues arising.
 
There is something called the Dwelling House Exemption for family members who live in the family home to look after parents - but there are conditions attached to it. Your sister is entitled to 335k tax free and unless her inheritance is above that figure there is no need to investigate. My understanding is that if the sale price of the house was more than the probate value she will have to have to pay CGT on the difference as will the rest of the beneficiaries
 
Feemar5 said:
My understanding is that if the sale price of the house was more than the probate value she will have to have to pay CGT on the difference as will the rest of the beneficiaries
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The estate/executor is responsable for paying any CGT on the capital gain on the property between the death of death and date of sale. The inheritors have nothing to pay for CGT - their inheritence will be increased by their share of the net increase in the property value (increase in value less CGT)
 
An example that may help.

The value of the estate at the time of death is €500k, as each heir (children of the deceased) received less than €335k none have any inheritance tax to pay.

The executor sells the estate for €600k, CGT must be paid on the €100k increase say €33k. The executor can pay any expenses of the estate, funeral costs etc, from the remaining €567k.

That leaves the executor with say €550 to distribute between the heirs. If each individual heir's share is still less than €335k, no CAT to be paid.

I really cannot see why professional advice would be needed. Perhaps I am missing something.
 
Thank you for that very clear explanation. Are there any allowable expenses other than the estate agent and solicitor fees against the CGT payable by the estate?
 
No, only fees and other payments directly related to the sale of the property are allowed as expenses

Obviously any expenditure related to the house between the date of death and the sale, eg insurance, maintenance, alarm fees, etc would be paid by the executor from the estate but they are not allowable against CGT
 
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