CAT return due, can I offset anything against this tax?

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Bronco Lane

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When completing a CAT return on an inheritance, can I offset against the tax, the cost of Probate, Solicitor's costs, Estate Agent's costs, Executor's costs, etc? Is there anything I can offset or is the Gross inheritance taxed for the full amount less allowance?
 
The various costs you list are paid for by the estate, thus reducing the amount inherited.

The CAT is paid by the inheritor based on the value of the inheritance - thus you do get the offset, although indirectly.
 
jpd said:
The various costs you list are paid for by the estate, thus reducing the amount inherited.

The CAT is paid by the inheritor based on the value of the inheritance - thus you do get the offset, although indirectly.
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Our solicitor has withheld circa €20k to pay CAT on the amount of those costs listed above. This CAT will be paid for by the estate rather than by the individuals who inherited the balance. So their inheritance is reduced by the €20k. withheld for CAT. So there is CAT paid on the amount of the costs as well?
 
CAT is not charged to the estate - it is paid by the beneficiaries. It may be that the solicitor is retaining some of the monies due to the beneficiaries to pay the CAT on their behalf.

It sounds like he is not explaining it very well
 
jpd said:
CAT is not charged to the estate - it is paid by the beneficiaries. It may be that the solicitor is retaining some of the monies due to the beneficiaries to pay the CAT on their behalf.

It sounds like he is not explaining it very well
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Yes. Thank you. This is what is happening. However it still means that the beneficiaries cannot offset any costs against CAT, not even the cost of probate.
 
Bronco Lane said:
When completing a CAT return on an inheritance, can I offset against the tax, the cost of Probate, Solicitor's costs, Estate Agent's costs, Executor's costs, etc? Is there anything I can offset or is the Gross inheritance taxed for the full amount less allowance?
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On what basis are these Executor's costs being arrived at.

It is most unusual, if not actually prohibited, because if you think about it the executor could fritter away the estate on "costs".
 
SBarrett said:
In effect it is as the amount you are receiving is less, therefore the amount subject to CAT is less.



Steven
www.bluewaterfp.ie
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If the estate has €900k. There are costs of €50k. (Solicitor, Estate Agents, Probate, Maintenance plus CAT on these costs) Then there is €850k to be distributed to beneficiaries. The beneficiaries pay CAT on the €850k less allowances of €225k per person.
What happens to the other €50k that was originally in the estate before costs. In our case the solicitor held back a sum of money to pay CAT on the €50k portion as well. In otherwords CAT was paid on ALL of the €900k either by the beneficiaries or by the estate. I could never get my head around this?
 
The CAT liability is calculated on each beneficiary's share of the estate minus certain costs. It's not just as a simple as calculating the tax on the basis of the cash or other assets the beneficiary receives from the executor.

If the amounts are in any way significant, its well worth having a professional prepare the CAT computation and return, because the cost, in terms of tax interest and penalties, of making an inadvertent error could be high.
 
SlurrySlump said:
If the estate has €900k. There are costs of €50k. (Solicitor, Estate Agents, Probate, Maintenance plus CAT on these costs) Then there is €850k to be distributed to beneficiaries. The beneficiaries pay CAT on the €850k less allowances of €225k per person.
What happens to the other €50k that was originally in the estate before costs. In our case the solicitor held back a sum of money to pay CAT on the €50k portion as well. In otherwords CAT was paid on ALL of the €900k either by the beneficiaries or by the estate. I could never get my head around this?
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You have to get the taxable value of the assets. In arriving at that, some costs are deductible and others aren't.

I am not a tax advisor but you can deduct executors costs, solicitors fees. I imagine the estate agent fees in so far as valuing the property are deductible.

I can't see how estate agent fees paid for the sale of a property are deductible. It's the beneficiaries decision to sell a property. If the property isn't sold, should the CAT be higher than if sold?


ircoha,

When I was the executor of an estate, I had to give receipts to the solicitor of any costs incurred as executor. It was for a family member who lived in England so there was flights, accommodation to be paid for in that case. There is also the cost of obtaining death cert and copies, notice in the paper, funeral costs, contribution to the church etc.



Steven
www.bluewaterfp.ie
 
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