cat query

[Hamilton]

Hi

I have a query in relation to CAT for an unmarried couple who owned a house, joint ownership. One partner dies and house is put up for sale, house sale agreed but no contracts signed as yet. I have been told by revenue that the CAT liability is half the value of the house at time of death, less half the outstanding mortgage, less the Group C threshold of 23,908 and the remainder is taxed at 20 %
If this is correct then then half the value of the house is 170k, less half the outstanding mortgage which is 140k which amounts to 30k. Then 23,908 is taken from this, leaving 6,420% , therefore total CAT is 1,218.

Firstly, am I correct is this?
Secondly, my query is if the life insurance will pay off the total mortgage, then can you still deduct half the outstanding mortgage?

I have found it very difficult to get a definite answer on the situation, any help would be greatly appreciated.

 

[Vanilla]

Doubt if you can deduct half the mortgage if the life insurance kicks in to pay it off. However you can deduct the legal fees of the probate and sale and auctioneers fees too before assessing tax.

 

[bazermc]

Hi

I have a query in relation to CAT for an unmarried couple who owned a house, joint ownership. One partner dies and house is put up for sale, house sale agreed but no contracts signed as yet. I have been told by revenue that the CAT liability is half the value of the house at time of death, less half the outstanding mortgage, less the Group C threshold of 23,908 and the remainder is taxed at 20 %
If this is correct then then half the value of the house is 170k, less half the outstanding mortgage which is 140k which amounts to 30k. Then 23,908 is taken from this, leaving 6,420% , therefore total CAT is 1,218.

Firstly, am I correct is this?
Sounds about right, but can you claim what is called private dwelling exemption? bascially the inheritance can be taken free of tax provided you ontinuously occupied this dwelling house as your only or main residence throughout the period of three years immediately preceding the date of the inheritance and you do not own any further properties at the date of inheritance and lastly you continue to occupy the house for 6 years following the inheritance


Secondly, my query is if the life insurance will pay off the total mortgage, then can you still deduct half the outstanding mortgage?
I would say no as you the taxable value subject to CAT is the "encumbrance free valaue" as the mortgage is being cleared it is no longer an encumbrance.
I have found it very difficult to get a definite answer on the situation, any help would be greatly appreciated.
It may be no harm to speak to an adviser or accoutant as they revenue are not usually forthcoming with answering specific questions/queries.

I note that the house is being sold CGT may also factor, principal private residence relief (PPR) may be available ensuing no tax payable

 

[Hamilton]

Thanks for that. The house was a new house and not lived in for 3 years prior to inheritance. So if half mortgage amount cannot be deducted then it is more likely to be 170k less the threshold, therefore CAT nearly 30k??

 

[bazermc]

Thanks for that. The house was a new house and not lived in for 3 years prior to inheritance. So if half mortgage amount cannot be deducted then it is more likely to be 170k less the threshold, therefore CAT nearly 30k??

You can still qualify for the exemption if the house replaced another property, for a period of three years within four years immediately preceding the date of the inheritance.

 

[Hamilton]

Thanks but the house did not replace another, it was the first time the couple lived together.