Inheritance Tax for low-income people!

[rock3r]

A relative is about to inherit a property on which a lot of tax will be due.

Does the revenue ALWAYS demand that the I-tax is paid in full, immediately, or is it possible she could pay it all off over time?

 

[ClubMan]

I presume that income has nothing to do with it since inheritance tax is a capital acquisition tax and nothing to do with ncome tax. Have you read the Revenue summary guides to at least get some idea? Chances are your relative should get independent, professional advice on assessing and discharging their tax liabilities.

 

[mf1]

If a lot of tax will be due, then, logically, its got to be a reasonably valuable asset.

It may be that they would like the asset but cannot afford the tax - they could decide to waive their entitlement to the asset. But I doubt that.

Revenue are reasonably sympathetic in genuine hardship cases ( e.g. inheriting a house with a right of residence for a disabled geriatric relative so that house cannot be sold to discharge the liability). They may allow the tax to sit ( although very likely accruing interest) until the asset can be sold.

But if its a case that its no hardship but just unhappiness about the unfairness of it all ( and I'm not suggesting that that is the case here but a lot of my clients do have what I call a "me no like" approach to taxation!) then Revenue will suggest that the asset be sold to pay the tax. They get their money and beneficiary gets the after tax benefit of the gift. Which is a lot better than nothing at all.

mf

 

[rock3r]

Well the asset is, of course, a house and it would be a bad wrench for the relative to have to give it up: it was always the plan of the departed that my relative would move into the house.

So in the absence of disabilities and the fact that my relative is a pensioner (and thus not really in a position to take up a loan) she'll have to sell the house that's been in her family for generations?

We'd be willing to chip in to pay it off as a loan at ECB interest rates, of course. If needs be, we'll set up a fund to pay it off. Pay X thousand out of pocket and the rest as a loan.

 

[rock3r]

If anyone has anything to say which might be helpful, it'll be deeply appreciated.

We will do our own due diligence. Better to say something which might be wrong than say nothing at all, you will not be held responsible.

 

[aircobra19]

....
But if its a case that its no hardship but just unhappiness about the unfairness of it all ( and I'm not suggesting that that is the case here but a lot of my clients do have what I call a "me no like" approach to taxation!) then Revenue will suggest that the asset be sold to pay the tax. They get their money and beneficiary gets the after tax benefit of the gift. Which is a lot better than nothing at all....

IMO its not right that someone has to sell a property, left to them as a residence in order to pay the tax on it. It effectively denies them the property. I think the tax should only become due once the inheritor stops using it as their primary residence.

Anyway the situation is as it is and theres not much you can do. Ring the revenue and see what options they give you. I suspect you'll have take out a loan to pay the tax or sell the property. I can't imagine it would be difficult to get a loan against a property though. I think ClubMan is right, professional advice is what you need tbh.