Sell the house now or pay a huge tax bill?

[billy-bob]

Apologies if this is a well worn subject, I checked a few threads but everyone's circumstances are different, so I'm hoping someone can help.

My parents died last year, and their estate was fairly sparse, the largest asset being the family home, all paid up. My brother is acting as executor, and taking his sweet time about it, but that's fine. My niece (my parents' grandchild) moved into the house with her family last November, did it up a bit, put down new carpets, etc, and has lived there rent free for the last 9 months while saving for a mortgage.

My brother has now come out of nowhere and told her that "we" have to put the house on the market, or we'll be hit with a massive tax bill. I've not spoken to him (for other reasons) but my sister informs me that if we sell it now, we'll get the full selling price (it won't go over the threshold), but if we waited (for what or until when, I'm not sure), that amount could be halved by some tax bill.

This is all third hand at this point, and I'm sure some detail may be lost or embellished, but I can't imagine what this all means. I took a look around revenue.ie and citizensinformation.ie, but can't see any reason that one would need to sell a house to avoid some sort of large tax bill? My brother wasn't particularly gracious about letting my niece in there in the first place, so I'm wondering if he's using some sort of tax issue to get her out now.

 

[mf1]

It may be to do with Capital Acquisitions Tax - and valuation dates.

From an outside perspective, one would be asking:

1. Why has house not been sold?
2. Why is niece living there at all? And rent free?

And you should find out what exactly the issues being raised are. It's just speculation otherwise.


mf

 

[billy-bob]

Tks for the reponse, I don't really have any good answers. It's not been sold because it's not on the market - it was in pretty bad shape when my parents died, so my niece offered to move in, spruce it up and live there until we decided what we were going to do. I figured since none of us are in desperate need of the cash, we'd sit on it until the market picked up a bit, and it's nice to have it lived in, in the meantime.

Also, and correct me if I'm wrong, since there's 4 children, the house would have to be valued at 1million+ before any sort of CAT comes into effect.

 

[44brendan]

The "huge tax bill" issue seems strange. Unless the value of the house is extremely high, it is likely that the divided return to the siblings should be within threshold limits. CAT value would be the date of acquisation of the property and subsequent sale would have no relevance to this. Realistically, you will need to establish the full circumstances of the bequest (including any other divided property) in order to establish whether a CAT charge applies. Would do no harm to discuss with your accountant, but you will need to give him the complete information re probate value etc.