Inheritance Tax?

kormak

Folks,

Does anyone have any info or advice on inheritance tax?
Is it true that if you are left over an acre in land it applies?
may be an issue in the future and I want to try avoid it if at all possible, or at least lessin the blow!

muffler

The guys in the Accommodation & Property forum will know about this.

Thread moved.

Mellor

it depends on who it came from, as in father or brother for example

kormak

It will be my father leaving me the land.
The solicitor maintains it's over an acre and may need to be reduced.
Which is no problem as it's quite a large site.
Just looking to find out the facts?

thanks

snellers

ensure the land is valued based on it for agricultural purposes and not once your planning permission granted on it (if that would be a plan)....would be a costly mistake!

Victor

There is no inheritence tax. There is Capital Gains Acquisitions Tax. You can gain about €500,000 tax-free over your lifetime from you parents.

On larger sites, the Revenue may take the view that there is development potential.

Check out www.revenue.ie and ask your solicitor for specific advice. I suggest you not use the same solicitor as your parents, so independent advice can be given and any transfer can't be challenged by that route.

grumpytrousers

unless it's quite literally a gold mine on this acre, there's bog all chance of CAT being charged. Unless you've previously recieved gifts from your parents amounting to roughly half a million.

There will be stamp duty at half the normal rate as you're related and if the intention of your auld fella giving you the site is so you can build a house for yourself on it, you might be exempt from that as well. Like the lads are saying - the solicitor who's handling the transaction FOR YOU should be able to advise you fully on this, but this would be the 'back of a fag-box' calculation!

*edit* my comment about stamp duty applied obviously if it was a transfer while father was alive to son. if he was dead, it doesn't apply.

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pigeonbutler

Victor wrote: »

There is no inheritence tax. There is Capital Gains Tax. You can gain about €500,000 tax-free over your lifetime from you parents.

On larger sites, the Revenue may take the view that there is development potential.

Check out www.revenue.ie and ask your solicitor for specific advice. I suggest you not use the same solicitor as your parents, so independent advice can be given and any transfer can't be challenged by that route.

+1 on reading up the guides on Revenue website.

I think Victor is mixing up Capital Gains (Tax imposed when you sell a capital item for more than it cost) and Capital Acquisition Tax (inheritance tax & gift tax) but he's correct that one can receive €496,824 tax free from your parents over the course of your lifetime. That limit is increased each year (roughly) in line with inflation.

In addition, there is a specific exemption for the inheritance of certain dwelling houses (up to and including 1 acre around the house). In order to apply for this exemption though you must have lived in the house yourself for a specified period immediately before the inheritance and you must not own any other house.

Re: the 1acre around the house. You need only concern yourself with this if your eligible for dwelling house exemption (see above). And if so, the acre which "would be the most suitable for occupation and enjoyment with the dwelling house" is included in the exemption and the other land will be taxable.

All things considered though, if you haven't received any significant previous gifts/inheritances from your parents and the proprty is worth less than €500,000, you've nothing at all to worry about.

caterpillargirl

Wow thats interesting Pigeon butler!!

Sorry for jumping on the bandwagon but I have a question,
I live in a house on my parents land within the acre, the house hasn't been signed over to me (can't afford to pay capital gains) but will be willed to me. The house itself could be valued at anywhere between 5-700K depending on the downturn. IS this a loophole, is it possible that I won't have to pay this??
If so it would really mean so much to me, I really object to this law, my father worked hard all his life and already paid the taxes associated with building this house. Its crippling to face a new tax bill if when I eventually inherit!

Thanks in advance!!!!

grumpytrousers

http://www.revenue.ie/leaflets/it39.pdf

page 51-ish...

caterpillargirl

Thank you so much grumpytrousers!!!!
Thats great news!!!!!!!!!!!!!!
Wow!!:D

pigeonbutler

It doesn't matter what it's worth if you satisfy the conditions for the relief.

Bear in mind that you must continue to occupy the property for 6 years after the inheritance or the tax will become liable.

If the property is worth €700K and you've never received any other gifts/inheritances from your parents then you'll have a potential bill of approximately €40K.

I can't say I agree with you on the general suitability of an inheritance tax (though I do agree with the existing exemptions on a house one lives in). I think people should have similar opportunities to get on life regardless of the success of their parents. That's obviously not always going to be possible but an inheritance tax is one way of levelling the playing field a bit.

caterpillargirl

Thanks for your mail pigeonbutler! Good additional info!
I can see your poing on inheritance/death tax. But I still feel that it is a double tax. Inheritances are unequal and I don't think we can change that. I'm all for paying taxes, I work hard and am in the higher income bracket, I also pay for creche with no tax relief. I feel that this tax penalises hard work and...if I accumulate some money (which I hope to over the course of my life ) which I have paid tax on a number of times. That is my cash, not the states. The state already has my fully paid up contribution. When I decide that my property should go to my children I don't see why they should have to pay for something that has already being taxed.....
I know the logistics and that they'd take money in the form of other taxes if not from inheritance tax but it still doesn't sit quite right with me.....

grumpytrousers

for what it's worth, catterpillargirl, it's a slightly fairer system than used to exist. Back in the day, if you snuffed it leaving an estate of €2m the state levied a probate tax on that that had to be paid absolutely. No questions asked.

what we have now, assuming one accepts that most jurisdictions levy some class of tax on property changing at death, is one that at least allows closer relatives to get *more* tax free than the further flung ones. You can get half a million from your parents, but only 50k from an uncle.

The real problem that you're seeing is that the thresholds for Capital Acquisitions Tax have been increased year on year in line with inflation, roughly. However, that inflationary increase has never taken account of the mad increases we have witnessed in the values of residential property. If they had, an awful lot less people would be far better off.

There are also other ways of being exempted from certain taxes, such as if you are inheriting Agricultural land or a Business.

I'm not justifying anything for a second - merely pointing out that, a propos of nothing - it could be a fecks sight worse.