Life Interest in House when making Will

S

suicra05

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Hi,

I am about to update my will and I want to leave some investment property to my 2 children (age 22 & 17). There is a scenario where I believe you can give your children "Life interest in the property" which may help them with any CGT to be paid. How does this work in practice? All replies are appreciated.
 
Take you solicitor's advice, but in general, keep your will simple.

Don't make life awkward for your beneficiaries in an attempt to reduce taxation.

Brendan
 
I suspect there is confusion in the OP's mind arising/ to do with

1. Dwelling House Relief

2. Capital Acquisitions Tax- what the beneficiaries might pay on their inheritance which might be reduced by 1. above
and

3. CGT - on a disposal by the OP during his life - which does not arise on death.

mf
 
If you gift or leave your children anything, it will be subject to a lifetime limit of €335k from Capital Acquisitions Tax.

So if you leave them a property worth less than that, they will pay no Capital Acquistions TAx.

If you sell or gift a property while you are alive, you will be liable to Capital Gains Tax on any gain.

When you die, your capital gains disappear.

And to add one further complication, you can't be taxed twice on the save event.

So if you give your kid €400k cash, you will use up their CAT allowance.

If you then gift them a property worth €200k on which you pay €30k CGT.
They will pay CAT at 33% on the €200k , but they will be able to set the CGT paid against the CAT.

You probably need to talk to an accountant.

Brendan
 
suicra05 said:
Hi,

I am about to update my will and I want to leave some investment property to my 2 children (age 22 & 17). There is a scenario where I believe you can give your children "Life interest in the property" which may help them with any CGT to be paid. How does this work in practice? All replies are appreciated.
Click to expand...

A life interest is possible but not an ideal for tax planning. The gift is reduce to account for a limited interest. For example at 30 a male still pays 90.68% the value of the house while a female pays 92.48% value. At 50 the rates are based on 73 and 78% of the property.
Also remember they are unable to sell the property is they have a life interest if they need to move at some point. Also would be best to decided to gets the house once the life interest is finished.
 
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