Capital Gains on Executor sale

joejoem

Hi,

I have two questions.

1) I was told by an aquaintance that capital gains tax incurred on the sale of a property can be avoided if the gain is re-invested in the country within 12 months. Is this true?

2) To put into perspective - My deceased grandmothers house was valued at the time of her death at €600,000. It is now worth €1,250,000, and we wish to sell. There are four benificiarys who will now face a capital gains tax of 20% on the €650,000. Can this be avoided or decreased? Perhaps if the asset (€650,000) was reinvested they could avoid the tax?

Many Thanks

Victor

joejoem wrote:

1) I was told by an aquaintance that capital gains tax incurred on the sale of a property can be avoided if the gain is re-invested in the country within 12 months. Is this true?

I've never heard of that, unless there is some special scheme. You can however write off any capital losses you have against it.

2) To put into perspective - My deceased grandmothers house was valued at the time of her death at €600,000. It is now worth €1,250,000, and we wish to sell. There are four benificiarys who will now face a capital gains tax of 20% on the €650,000. Can this be avoided or decreased? Perhaps if the asset (€650,000) was reinvested they could avoid the tax?

I think this depends on what stage you are at after the executorship. If the property is now owned by the 4 of you, its a matter of CGT (@20%), if it is still part of the estate, it might be a matter of Capital Acquisitions Tax (@20%?) and Probate (@3%?). Each has allowances.

lomb

Victor wrote:

I've never heard of that, unless there is some special scheme. You can however write off any capital losses you have against it.

nah the op is right, it is a known scheme. im unsure if its still running, it was a definately legitimate 2 years ago. i know a guy who made alot of money on property and put it back into other irish property to defer the capital gains tax indefinately.

Victor

I suppose talk to solictor / accountant then.

I do know there is such a scheme for farms and small businesses, where I think if the family take over the running, that there is a benign tax régime.

MorningStar

The answer comes down to more detail. WHen did owneship get transferred? If the property is the primary resident of your grandmother it would have been exempt. If ownership has been passed then an asset you own has increased and should involve capital gains. If you or the others were resident they can avoid the tax as your home is exempt from CGT.

lomb

Nah i think the op is referring to what was called rollover relief, i found out it was abolished in the 03 budget. but before that u could sell property at a gain and not pay tax if u bought another property for investment purposes. this was a fair system but i think the government were worried about the exchequer revenue which was fair enough.

joejoem

Thanks for everyones replies.

It was my grandmothers primary residence who died 5 years ago.

My Aunt (who owns an investment property) moved into the house before my grandmothers death and has lived there since.

It was valued at the time of her death at €600,000.

It is now worth €1,250,000.

My aunt still lives there, and still owns a second investment property.

The property is due to go to the market in the summer.

What would be our best avenue to keep the CGT low?

Thank you

MorningStar

Your aunt is exempt from CGT. THe investment property doesn't matter as it isn't her place of residence.
It really depends on when the tranfer of ownership was or is done.

If you have not tranfered ownsership anad have decided to sell the assets and then divide the estate you should avoid CGT completely. You might be hit by inheritance tax as I am not sure of the transfer rates to grandchildren. YOur aunt again will be fine as she has a bigger allowance.

You should really talk to an expert with all the details. The amount of money involved really makes it worth while

joejoem

MorningStar wrote:

Your aunt is exempt from CGT. THe investment property doesn't matter as it isn't her place of residence.
It really depends on when the tranfer of ownership was or is done.

If you have not tranfered ownsership anad have decided to sell the assets and then divide the estate you should avoid CGT completely. You might be hit by inheritance tax as I am not sure of the transfer rates to grandchildren. YOur aunt again will be fine as she has a bigger allowance.

You should really talk to an expert with all the details. The amount of money involved really makes it worth while

Great thanks, who should I talk to?

joejoem

joejoem wrote:

Great thanks, who should I talk to?

I would be greatful if you recommend someone

MorningStar

joejoem wrote:

I would be greatful if you recommend someone

I would really expect the solicitor you are dealing with to be advising you or at least suggesting an accountant to take advise on.

Asking one close to you should be as good as any other

The_Conductor

joejoem wrote:

1) I was told by an aquaintance that capital gains tax incurred on the sale of a property can be avoided if the gain is re-invested in the country within 12 months. Is this true?

In answer to question 1 - you have 2 years in which to reinvest the gain within the country, not 12 months.

The following link has two guides which may be of interest to you-

1) Capital Aquisitions Tax (Really two types of tax inheritance tax and gift tax)
2) Overview of the way in which the income and assets of a deceased person in Ireland are taxed in the year of their death

http://www.oasis.gov.ie/death/taxation_issues/

As per above posts - seek professional help.