CGT - Inheritance

[lorrgmail]

Our Mum died with no will. 3 children inherit estate. 1 is living in family home with deceased mother for over 20 years. Executor has sold home and divided proceeds among 3 children advising us to each make our own CGT return. As the sibling who lived in family home, I presume she has no liability for CGT (has used the 1/3 share to purchase another property to live in) but the remaining two must each submit a CGT return and pay their proportion.
Executor advised by solicitor that each of us should make the CGT return. Yet I appear to be also getting advice from a third party that the executor should have paid the CGT before distributing the estate. As estate is now distributed will we each make a return and the sibling who has purchased an alternative property makes no return as it was their principal residence and they have simply used the funds to purchase an alternative residence.

 

[RedOnion]

You seem to be confusing Capital Gains Tax (CGT) and Capital Acquisitions Tax (CAT).

http://www.citizensinformation.ie/en/money_and_tax/tax/capital_taxes/

 

[dub_nerd]

Executor has sold home and divided proceeds among 3 children advising us to each make our own CGT return.

You mean CAT which applies to all gifts and inheritances. CGT only applies if a house went up in value between the date of valuation by the executor and the date of sale.

As the sibling who lived in family home, I presume she has no liability for CGT (has used the 1/3 share to purchase another property to live in) ... and the sibling who has purchased an alternative property makes no return as it was their principal residence and they have simply used the funds to purchase an alternative residence.

Unfortunately, that's incorrect. Your parents' house can't be treated as a child's PPR for the purpose of avoiding CAT. The only exception is the Dwelling House Exemption, and they would have to have remained living in the house for six years after inheritance and, since the rules changed last year they would also have to be a dependant. (More info [broken link removed]). The sibling who lived in the home owes CAT, same as the other siblings. (However, check the exemption amounts for CAT -- it could be that none of you owe any tax, depending on the value of the house).

Yet I appear to be also getting advice from a third party that the executor should have paid the CGT before distributing the estate.

The executor was responsible for making sure any taxes and debts owed by your mother were paid out of the estate. You are responsible for your own CAT payment. (More info here).

 

[lorrgmail]

No I am not mixing up CAT with CGT. We are not liable for CAT. Their is a liability for CGT because value of house went up from date of death (or should it be date of grant of administration) and date of sale
My query is should executor pay CGT or is it correct that each of us is responsible for payment following distribution of estate? Also as one of us lived in house then technically they should be exempt from CGT

 

[Joe_90]

Who sold the house the beneficiaries or the administrator?

If the beneficiaries sold it then its the value increase the valuation date and the date of sale. The beneficiaries have a disposal.

If the administrator sold it then its value increase from the date of death and the date of sale. The estate has a disposal.

 

[lorrgmail]

The administrator sold house but maintains that on legal advice the estate less proceeds of house sale had already been distributed so therefore the proceeds from house sale can be taken as distributed and each beneficiary is responsible for CGT on gain arising from uplift in value. If this is correct then my query is does person who has always lived in property have to pay CGT when their portion of proceeds of sale went to purchase another property as their principal residence? I accept that two remaining siblings have a liability

 

[john luc]

as I understand what your asking is, you took the 1/3 proceeds you received from the sale of the house which was your home and you used these proceeds to buy yourself a new home.

 

[john luc]

[broken link removed]
there is an exemption to paying capital gain tax on a home you own which you sell and then use the proceeds to buy another home.
I had a look here and there is no mention of you living in but not owning the home. that does not mean there I am fully correct so you best check with revenue personally.

 

[lorrgmail]

Thank you but tax office advices going to taxation accountant! Reckon we will have to

 

[john luc]

let us know if you are able to apply an exemption

 

[Joe_90]

The administrator sold house but maintains that on legal advice the estate less proceeds of house sale had already been distributed so therefore the proceeds from house sale can be taken as distributed and each beneficiary is responsible for CGT on gain arising from uplift in value.

I have no idea what that means "the estate less proceeds of house sale had already been distributed" So there was cash there and the cash was given to the beneficiaries.

"Therefore the proceeds from the house sale can be taken as distributed", how could the proceeds of the house sale be distributed if the house had not been sold?

Two avenues if the administrator sold the house they signed the contract and put the estates number on the contracts. So the sale took place by the estate.

If in fact the three siblings signed the contracts and their PPS numbers were on the contracts the happy days, the person living in the house claims PPR as the lived in the property for their period of ownership. Gain: Proceeds - valuation date value.

Please do revert with the advice you get.

 

[Prosper]

If the beneficiaries sold it then its the value increase the valuation date and the date of sale. The beneficiaries have a disposal.

What does this mean? Is the valuation date not the date of death?

Two avenues if the administrator sold the house they signed the contract and put the estates number on the contracts. So the sale took place by the estate.
If in fact the three siblings signed the contracts and their PPS numbers were on the contracts the happy days, the person living in the house claims PPR as the lived in the property for their period of ownership. Gain: Proceeds - valuation date value.

What if the beneficiaries are also the executors of the estate and they did a Personal Probate Application? However, it's the deceased PPS number on the house sale contract ? Logic tells me it doesn't make a difference - the beneficiaries are still the beneficiaries regardless.

"Therefore the proceeds from the house sale can be taken as distributed", how could the proceeds of the house sale be distributed if the house had not been sold?

The OP said in his first post that the house has been sold and the proceeds distributed.

 

[Joe_90]

I think the personal rep is relying on the default position that is where all the proceeds are distributed (in error or otherwise) that the beneficiaries will be liable for the CGT.

 

[Vanessa]

If some beneficiaries are resident outside the country then the executors must ensure any taxes due are paid. Those resident in the country are responsible for declaring the tax liability