Elderly sibling inheritance and double tax question

[daisymay]

Would greatly appreciate some outline guidance to help my father make a decision.
My aunt died intestate ( two siblings) one is my father, and other is an uncle.
Calculating her estate roughly €700k in assets - applying group B threshold rough CAT €102k each payable by both siblings.
in order to pay the inheritance tax my aunts house would have to be sold but this leaves my elderly father in a mess as his house is literally a hairs breath from hers and he uses her sheds to keep his car and tractor in ( previously used for keeping cattle), but has not been used in the last 20 years to keep livestock.

My uncle has suggested to my father that he sells his own house and gives him half the proceeds! My fathers house worth roughly €450k going on houses sold in the area of the same style, size.
He has suggested then that my father move into my aunts house and that way he gets to keep the sheds and my uncle gets his cut. My aunts house on the open market with the sheds would roughly be €500k as someone could potentially run a business from those sheds.
My elderly father doesn’t want this happening due to the closeness of the properties.
I know the option is there to build up the walls between properties but what if my father did want to move into my aunts house to keep the sheds what is the likely tax scenario ?
Baring in mind my dad is elderly and I would hate to see him lose every cent when he might need it for a nursing home down the line.

 

[ClubMan]

My aunt died intestate ( two siblings)

What about other family - spouse, children, etc.?

 

[Brendan Burgess]

This is confusing. Do I understand it correctly?

1) Option A - your father stays in his own home. Sells his sister's house. Someone else moves in and your father loses use of the sheds.
2) Option B - your father buys his sister's house from the estate and sells his own home. That way he keeps the sheds so no one else runs businesses from them.

 

[Brendan Burgess]

he uses her sheds to keep his car and tractor in

Is he actively farming? Does he need a tractor? If not, sell the tractor.
Is there nowhere else to keep the car?

 

[Brendan Burgess]

what if my father did want to move into my aunts house to keep the sheds what is the likely tax scenario ?

So this is Option C.
Split the sister's portfolio.
Sheds go to your father.
The house is sold on the open market.

I can't think of any unusual tax consequences of this? There is no CGT as of the valuation date i.e. the date of death of your aunt. There may be CGT on the increase in value from the date of death to disposal, but this should be small enough.

There would be legal and surveyor fees to split up the portfolio.

 

[TomEdison]

He has just inherited €250k, after payment of CAT. He can easily afford to make a commercial arrangement with someone for the storage of the car and the tractor. Or, if there is space on his own property, he can put up a shed for the purpose.

It makes no sense at all for him to move house in order to maintain his current arrangements for garaging his vehicles.

It might make sense for your father to buy your aunt's house and move into it in order not to find himself living next to a business conducted by a different new owner. But it's a pretty drastic thing to do. Plus, of course, he'd have to live beside whatever activity was then conducted in his old house, that he would sell.

 

[daisymay]

No he’s not actively farming so can’t use farmer relief.
He could sell the tractor and trailer but he has a lot of equipment and stuff that he would need to store elsewhere and has no sheds on his property.
I think his biggest fear is living beside someone who might run a business from the sheds and he doesn’t want people coming and going when he’s right beside her house.

 

[Annieindublin]

Unfortunately if the sister’s house is sold he can’t predict who will live there and what’s they’ll do. Maybe him retaining ownership of the sheds might protect him in that respect?

Can the house be sold without the sheds? Or would that damage the value of the house?

But while I feel for him, not much fun having a business open up beside you when you don’t want it theres not a lot you can do. But is it a real risk? Is the site, sheds etc a likely venue for a new business? And what sort of business? How much traffic?

Reducing the amount of sheds he needs by selling the tractor seems like the first step. And use some of the inheritance to build (presumably smaller) sheds for himself in his current home and wait and see what happens with the other house seems to be all he can do really.

 

[T McGibney]

Wake up folks, there's not a hope in hell of an elderly man like that being easily persuaded to sell a beloved tractor that he probably has had for decades.

 

[Annieindublin]

I’m a bit puzzled about your concern that he’d spend all his inheritance when he might need it for a nursing home. I can’t see sheds and a wall costing that much. Plus he still has his house.

 

[T McGibney]

He may well have some sort of right to continued occupation of or perhaps an ownership claim on the sheds having occupied them for 20 years.

The aunt's house may be unsaleable due to the proximity of the OP's father.

 

[Dr Strangelove]

I know the option is there to build up the walls between properties but what if my father did want to move into my aunts house to keep the sheds what is the likely tax scenario ?

Your father already owns half his sister’s house. He would then have to buy the other half from his brother at a valuation agreeable to the latter. Stamp duty must be paid on half the market valuation if this differs from the agreed valuation.

But mainly this is a human problem, not a financial problem.

 

[Brendan Burgess]

Wake up folks, there's not a hope in hell of an elderly man like that being easily persuaded to sell a beloved tractor that he probably has had for decades.

What time is it?

 

[Clamball]

This is a very difficult situation for your Dad. I can understand the issues he is facing at this time of life, living next door to his sister for decades and they having a very casual relationship about boundaries and sheds etc.

Would your Dad have the resources to buy the 50% from his brother? This would allow him to control the house and sheds. If he did need resources for a nursing home he can put all his assets into fair deal or sell on his time scale. So €350K to his brother and €102K to revenue?

If not would he have the €102K for revenue and then just retain 50% ownership of the house and sheds. He may decide to leave them in his will to someone else, rather than selling now and seeing a stranger move in.

If he needs to sell the inheritance to raise the €102K then he will have to pick the lesser of two evils.

 

[bkenn14]

What time is it,

Rural Ireland Time,
Possibly Born in the 1940s/1950s in Rural Ireland when owning a Tractor was hard earned has a very strong attachment to things that took many many years of savings to buy,
Daisymay
If One house Has To Be Sold
First he will have to explore can he afford to keep his sisters house by moving it to it, I suspect because the sheds are attached to his late sisters house they are by now more of a natural unit from a local landscape point of view
Which I suspect is the angle your uncle seeing it from,

selling his existing house may look better from natural landscape point seeing over many years its surroundings have taken shape,
If he keeps his present house and transfers sheds to his name he and the new owners may both finish up with less privacy and security because of the location of the sheds

If one has to be sold and he feel he needs a shed he can build on his existing holding which sorts out the shed problem,

he is then left with what i think is the real problem which is what is best seeing one has to be sold,

In my opinion selling his late sisters house with sheds attached possibly gives him a better chance of getting a hard working self employed type neighbours
On the other hand he could finish with neighbours who resent the fact when he is accessing sheds both finish up with less privacy,
I suspect his brother understands the situation on the ground better than any poster on hear and if one house needs to be sold it looks like his sisters house is the best to keep,
you say your fathers house is wort 450000 and his sisters is worth 500000, your uncle is taking a hit by suggesting your father to move into his late sisters,

One other Thing he needs to take into account will any decision he make affect the fair deal scheme (no idea but one to check out)

 

[_OkGo_]

Calculating her estate roughly €700k in assets - applying group B threshold rough CAT €102k each payable by both siblings.

How amenable is your uncle the helping his brother solve his problem? In my own opinion it is not the best financial approach but you could propose something as follows.

The house can be retained with equal 50:50 share and the remaining €200k would more or less cover each siblings CAT liability.

If you or any of your siblings (if you have any) are interested in living there, your Dad could gift his share to one of you while you purchase the other half from your uncle.

Failing that, is there any relation or interested party that could buy the full property that your Dad would be happy to live beside? If so they could buy during probate. Your Dad could offer your uncle to make up for a below market sale to get it sold to the right person from his perspective.

A lot depends on the family dynamics and relationships but if everyone is on good terms then it should be solvable.

 

[T McGibney]

For the record, this comment was not made in jest.

Wake up folks, there's not a hope in hell of an elderly man like that being easily persuaded to sell a beloved tractor that he probably has had for decades.

@bkenn14's explanation of the attachment that many older men have to old tractors and bits of machinery is on the button.

 

[daisymay]

My aunt has no children. Never married.

My father has used those sheds for 20 years to store his jeep, car and tractor. He loves being up there tinkering around and tbh it’s given him a purpose all these years.
My uncle on the other hand is greedy and wants the most money he can get from his share of my aunts estate.
He has no money and will rely on the sale of her house or my father selling his house to get his share of the inheritance.
I suspect if the portfolio was to be split ( my father keeps the sheds), that means aunts house is worth less on open market in turn less money for my uncle.

 

[Brendan Burgess]

I suspect if the portfolio was to be split ( my father keeps the sheds), that means aunts house is worth less on open market in turn less money for my uncle.

That does not matter.

Work out the value of the property as is and your uncle should get half.
If there is any reduction in value, then your father should bear the cost of that.

Brendan

 

[Annieindublin]

Perhaps moving is easier than losing his hobby? Unless there’s a substantial difference in the houses.

On a practical level which house is best, or more easily adapted, for less mobile living? Eg downstairs bathroom, fewer trip hazards, more weather proof.

Might be easier to move to his sisters old house and set up now and keep his hobby than build new sheds, and then have to adapt his house later,.upheaval either way.

I am caring for elderly folks living in a house that evolved with zero planning and the awkward corner, random steps, narrow hallways are a real challenge. Daily!