Inheritance tax - is there a way around this?

[monkey0804]

We currently are in a situation where dad has died, mam is dying, and of course the issue of who to leave the family home to has arisen. General concenus is to leave it to the one member of the family who as of yet does not have a home of his own. He isn't currently employed and has no savings, and is an artist, so he hasn't a hope of getting a mortgage/large loan.

So presuming he would be hit for inheritance tax, which he could not afford to pay, is there a way around this. Or how does this work?

If house is left to all of family do they collectively pay the tax or how does this work?

Thanks.

 

[WizardDr]

Sorry for your distress, this cannot be an easy time for you.

You need to know the value of the family home. The inheritance would be taxed under capital acquisitions tax. Assuming no other assets, his tax bill (if any) depends on two matters. One the value of the inheritance and (2) if he has received any other gifts/inheritances in the past. What does your mother say and what does her will say?

This limit is €466,725.

There are practical things that may arise if the family home is worth more than this and that is he will have to pay 20% of the difference and how will that be financed?

Each of the other children has the same limit, so in my view if the residence is valued much more than €400k ..the residence may be much bigger than he needs. Therefore a disposal might be the best.

 

[Unregistered]

Section 86 of the CAT Acts exempts gifts/inheritances of a "dwelling house". In summary, no tax is paid on the inheritance and the house is not included for the purposes of the exemption threshold (of €466,725) if the following conditions are met:

- the successor has occupied the house for at least 3 years before the inheritance
- the successor has no other dwelling-house (or interest in a dwelling house)
- the successor occupies the house for 6 years after the date of inheritance

Also, if your brother doesn't qualify for the above exemption you could structure the inheritance in such a way that you and your other siblings could take a certain interest in the house each and then gift your respective interests to your brother (exemption of €46,673 between siblings). In any case, the family home might be worth less than €466,725 so it won't be necessary.