Inheritance Tax / CGT on family home (only child inheriting)

Hi everyone,

I'm just looking for some feedback/insight regarding my own potential situation in the future. I have been looking at other posts in this forum and would just like to seek some general feedback regarding my own potential situation (if I outlive my parents that is).

Both of my folks have been living in the same home (my childhood family home) since I was born. I have no siblings and am now married with children living in my own house. Both of my parents are long retired and hopefully will be alive, happy and healthy for many years to come. My folks made a will years ago leaving everything to me in the event of their passing and therein arises my question.

If the family home passes on to me (standard semi-d probably valued 380,000-400,000) in the events of my parents passing where does that leave me in terms of CGT? I would likely intend on renting the home out as opposed to selling it and this would be the main asset I invest.

There are two taxes to consider
Capital Gains Tax which is paid by the disposer of an asset
Capital Acquisitions Tax which is paid by the receiver of an asset.

As it's the family home, there will be no Capital Gains Tax. In any event, capital gains disappear on death.

You can inherit up to €400,000 over your lifetime from your parents.

So if you inherit a house worth €380k and €120k of cash from your parents the total is €500k
There will be no tax on the first €400k (This assumes you have received no other gifts from your parents.)
The balance of €100k will be taxed at 33%

If you had already received a gift of €150k from your parents and then receive €500k on death - then the tax free threshold of €400k would be reduced by the €150k to €250k. You would then pay CAT on €500k - €250k = €250k

Brendan

Hi Brendan, thank you very much for the insight and feedback on this. Let us say for example sake I inherit my childhood family home worth 400k but don't intend on living it or selling it (but rather renting it) am I still liable for Capital Acquisitions Tax? No?

However it I inherit the home home worth 400k and 60k in cash savings then I'm to pay 33% on that 60k in Capital Acquisitions Tax ?

irishnovice said:

Let us say for example sake I inherit my childhood family home worth 400k but don't intend on living it or selling it (but rather renting it) am I still liable for Capital Acquisitions Tax? No?

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If you just inherit the family home worth 400k, and have no other gifts or inheritance from your parents, that's within your threshhold of 400k and so you will have no CAT liability. It doesn't matter whether you intend to live in the home, let it out, sell it or simply leave it vacant.

But if you get a total of 460k from your parents, you are liable to CAT on (460k - 400k =) 60k. Again, it doesn't matter whether you intend to live in the home, let it out, sell it or simply leave it vacant. What you intend to do with your inheritance, or part of it, generally doesn't affect your liablity to inheritance tax.

Hi Tom
Thank you very much for the explanation and help on this,

Thanks again for the feedback all this is a great place to come for advice and guidance

Hi.. quick question in relation to CAT - my father passed away in Feb 2024 and subsequentially we have sold the house and the land plus he had a share portfolio which has been sold - all this is now complete and we are about to get the monies from our solicitor - as my portion will be nearly €400,000 I have been looking to see what tax I will have to pay - the current threshold is €400,000 but at the date of death it was €335,000 - will I have to pay another over the €335,000 or as I am only receiving the monies in the next month will it be €400,000? I can't seem to figure it out as there are various dates in relation to valuation etc? Kind regards...

Can't the executor/solicitor clarify what the relevant valuation date (dates?) is (are?) which will determine which group A exemption threshold figure will apply - €335K or €400K?

Luke25 said:

there are various dates in relation to valuation

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There can be.

The relevance of valuation date relates to:
- when CAT is due,
- when assets are valued,
- pay and file deadline (and interest and surcharges if applicable),
- conditions for CAT reliefs.

The date that determines the CAT rates and group thresholds that apply is usually the date of death of the person leaving the inheritance. This is outlined by Revenue here.

As the date of death occurred before 2nd October 2024, the applicable Group A threshold is €335,000.

It would be no harm to get a professional to review the facts and confirm.

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