Thanks Vanessa - I understand now. I had assumed that he wouldn't have to pay until he received the inheritance but what you are saying is that he has received it even though he does not have anything to show for it yet.
Yes. The property cant be sold until it is in the new owners name. Revenue dont have a great "bedside manner" on money owed and as Gordon points out the penalties can be heavy. For a lot of people raising funds to pay tax takes the good out of an inheritance (depending of course on amount inherited) and inheriting property in a falling markets can lead to problems especially where there are a number of shareholdersThanks Vanessa - I understand now. I had assumed that he wouldn't have to pay until he received the inheritance but what you are saying is that he has received it even though he does not have anything to show for it yet.
But applying that logic if he held on to the property, he’d never have to pay tax. If someone doesn’t have the cash to pay an inheritance tax liability, Revenue will allow if to be deferred, subject to interest at around 8%.
The inheritance tax due will be based on the value of the property on the date of death of the donor. (I am open to correction on this but I am working on what happened in our family) Its not difficult to get that value. You could get an auctioneer to give you an estimate on what the property would have roughly made at that time. You could always work it out yourself if you get the average price for similar properties at that time. This would be acceptable to Revenue as long as you can show how you came up with the figure and dont be chancing your arm on dubious figures.The property is currently valued at 200k. If this value was to fall due to the current crisis and it sold for less would there be any hope of the tax liability being reduced?
I am certainly open to correction re "valuation date". We can all give a rough idea of what is needed here but overall I think it can be straightforward once professional advice is soughtIrish property is always subject to CAT.
My understanding is that the date of death is the ‘valuation date’ (i.e. tax point) in circumstances where someone inherits something immediately (e.g. a joint tenant inheriting a profit).
If I inherit something like an investment property from a deceased uncle, my understanding is that the ‘valuation date’ is the date on which probate is granted.
i.e. it’s the date of the grant of probate most of the time
Yes; He steps into the shoes of his deceased wife and takes her category (which appears to be B in this case).I'm assuming he's a category C recipient with a limit of 16,250? Are there any extra allowances due because it passed via his wife who pre-deceased him?
The OP said that the beneficiary lives in the UK. Assuming ordinary residence and domicile in the UK, is he liable for Irish CAT? If so, is this liability based on the location of the property, or the location of the property's owner?
So, for example, take the following scenarios:
A) UK resident inherits UK house from UK resident.
B) UK resident inherits UK house from Irish resident
C) UK resident inherits Irish house from Irish resident
D) UK resident inherits Irish house from UK resident
E) Irish resident inherits UK house from UK resident
F) Irish resident inherits UK house from Irish resident
G) Irish resident inherits Irish house from UK resident.
H) Irish resident inherits Irish house from Irish resident.
Which of A, B, C, D, E and F generate a liability to Irish CAT and/or UK inheritance tax?
Obviously, A will generate a UK liability only and H will be Irish liability only. And E to H will definitely generate an Irish liability.
Apart from that, can anyone fill in the blanks?
Yes; He steps into the shoes of his deceased wife and takes her category (which appears to be B in this case).
In the wording of the statute:
Where any donee or successor is, at the date of the gift or at the date of the inheritance, the surviving spouse of a deceased person who, at the time of that deceased spouse's death, was of nearer relationship than such donee or successor to the disponer, then such donee or successor is, in the computation of the tax payable on such taxable gift or taxable inheritance, deemed to bear to the disponer the relationship of that deceased person.
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