SA2 Probate & IT 38. How to calculate IT due to Revenue ?

J

Joebloggs

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Hello

Can I ask your advices on a calculation please.

We are nearly ready to submit the SA2 Form to Revenue for my late uncle. (No solicitor involved)

The assets consist of house (value €160k) and land (value €70k). Total €230k. No cash assets.

Liabilities will be around €30k approx.

Net value of his estate will be approx €200k.

House has been left to one nephew.


Land has been left to 7 nephews & nieces. The 7 nephews & nieces will not inherit €10k each as originally thought because of the debts owed by the deceased.

From where do we deduct the €30k debts before we calculate the IT ? I hope I am making sense !
 
Not really

IT = Income Tax ? There is no Income Tax due

IT = Inheritence tax ? This is paid by the recipients, not by the estate

Each inheritor/recipient will have to calculate the tax due, if any, on their inheritence and file an IT38

Completing your gift or Inheritance Tax return (IT38)

Filing your return and paying your tax when you receive a gift or inheritance.
www.revenue.ie www.revenue.ie

The form SA2 has the net estate value - ie the value of the estate after all debts are paid
 
jpd said:
Not really
Click to expand...
They are to me. They're asking where the money to pay the €30k debt should come from before the estate pays out to the beneficiaries, given that the estate comprises only property and land.
 
Thank you for your replies.

Apologies, it is Inheritance Tax that I am referring to.

Clubman is closer to my query.

Basically, as the land is valued at €70k, each nephew/nieces would have inherited €10k if there were no debts on the estate. As obviously debts will have to be discharge first, surely each nephew/nieces does not have to pay Inheritance Tax on €10k as they will not now receive this amount ?

Thanks so much for your replies so far.
 

How do you calculate CAT?

This page describes how to calculate CAT.
www.revenue.ie www.revenue.ie

The nieces and nephews won't be liable to pay CAT unless they've previously received gifts or inheritances which bring them above the threshold.
 
Zobeda said:

How do you calculate CAT?

This page describes how to calculate CAT.
www.revenue.ie www.revenue.ie

The nieces and nephews won't be liable to pay CAT unless they've previously received gifts or inheritances which bring them above the threshold.
Click to expand...
OP here.

The nephews & nieces have already exhausted their Group B threshold from a previous inheritance so they will have to pay Inheritance Tax. I am trying to calculate what figure they will have to pay Inheritance Tax on on this occasion €10k or a lesser figure ??.

Thanks again.
 
Where will the Estate get the 30k cash to discharge the debts?

Will one of the two assets have to be sold?
 
Yes. Both house & land will have to be sold to pay the debts so the beneficiaries will not actually receive the amounts that the house and land are valued at. Therein lies the crux of my difficulty in calculating what figure to use to pay the Inheritance Tax due to Revenue on the IT38 Form.

Thank you.
 
Ah, okay, well then it's simple maths.

Question: is the one nephew due to inherit the house also included in the seven people due to inherit the land?
 
Protocol said:
Ah, okay, well then it's simple maths.

Question: is the one nephew due to inherit the house also included in the seven people due to inherit the land?
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Yes. One nephew gets the house and 1/7th share of the land. House valuation €160k. Land Valuation €70k, left to 7 nephews & nieces.

Cheers
 
Assets = house 160k and land 70k = total 230k

Assets = house 69.5% share and land 30.5% share.

Net assets = 200k, after debt repaid.

Nephew 1 inherits 69.5% of net assets = 139,130 cash

The seven people inherit 30.5% of 200k = 60,870 cash, or 8695 each
 
Nephew 1 gets 139,130 plus 8,695 cash = 147,825

The other six get 8,695 each or 52,170

Note, all of these amounts are before CAT, which is the responsibilty of the beneficiaries.
 
Really, all that's happening is that the inheritance is being reduced by (30 / 230) = 13.05%, due to having to repay the debt.

Nephew 1 gets 160k house plus 10k land = 170k, less 13.05% = 147,815
 
Protocol said:
Nephew 1 gets 139,130 plus 8,695 cash = 147,825

The other six get 8,695 each or 52,170

Note, all of these amounts are before CAT, which is the responsibilty of the beneficiaries.
Click to expand...

Thank you very much Protocol for taking the time and trouble to calculate.

That is very helpful to establishing the figures to use on the IT Form to calculate the Inheritance Tax owed by each beneficiary. It is great to see it written down.

Many thanks.
 
Joebloggs said:
Thank you very much Protocol for taking the time and trouble to calculate.

That is very helpful to establishing the figures to use on the IT Form to calculate the Inheritance Tax owed by each beneficiary. It is great to see it written down.

Many thanks.
Click to expand...
Their tax affairs are their business. Unless there is a specific and compelling reason why they can't attend to this themselves, you would be well advised to let them sort it out. You won't get much thanks from anyone if you get it wrong.
 
One further thing in case it is not already factored into the 30K debt already mentioned.

The estate bears the cost of selling the house and lands.
 
Thank you to all the contributors of AAM for your advices. It has been very helpful.

Thank you.
 
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