Inheritance tax, money I don't have

LegacyUser

Have inherited a property, before the recession a very valuable one, but I am now liable for about E80,000 inheritance tax as it was aunt-niece, not parent child. I have hardly any money myself and am worried about having to sell for a recessionary price to pay tax. There doesn't appear a way out. Sad.

seamus

Consult a solicitor, but your two mains options are:

1. Sell the house at a knockdown price, pay the tax.
2. Obtain a small mortgage on the property to cover the inheritence tax. €80k over 30 years is roughly €300/month - but obviously you're not stuck for 30 years, you can change that all you want.

My preference would be option 1 - assuming the house will fetch more than €100k, it's money in the bank for you. But if you would like to live in the house or otherwise hold onto it, you can always clear the tax with a small mortgage.

CDfm

Option 2 would be feasable too if its rentable

whiteblueman

You dont realise how lucky you are.........the most I have ever got is a fiver pocket money so quit moaning about the tax as this means the value of the property was circa €400k. Poor you

Silverfish

whiteblueman, please read the PI charter before posting.

Helpful and constructive replies only please.

Odats

Should this be in the taxation forum.
Best advise is to see a tax consultant about the matter.

Rb

Karen77x wrote: »

I have hardly any money myself... am worried about having to sell for a recessionary price

Oh, you poor thing, what a spot of bother you appear to be in.

To be quite honest, you don't sound as though you're mature enough to look after a house so I'd suggest just selling it.

McCruiskeen

As far as I know, Capital Acquisitions Tax can in certain circumstances be paid in 5 yearly in installements. I'm not an expert on CAT but if this gets moved to the tax forum, you might get some decent advice.

hungryhippo

You have a great case for a non-statutory instalments arrangement.
See an accountant to make an appointment with the Revenue.
Sorry for the format below:

Capital Acquisitions Tax Manual

Part 17 - Collection Issues

Table of Contents
17 ...................................2 Part 17 - Collection Issues
17.1 ....2 Payment by Statutory Instalments – Section 54 CATCA 2003
17.2 .......................................3 Payment by Non- Statutory Instalments
17.3 .......3 Registration of the debt as a Voluntary Judgment Mortgage

Revision Date: 17th June 2009 1
Capital Acquisitions Tax Manual
Capital Acquisitions Tax
17
Part 17 - Collection Issues
The vast majority of taxpayer’s discharge their capital acquisitions tax liability by direct payment when they submit their self- assessed taxes return. In the small number of cases where this does not occur, there are a number of other payment options available. These are:
��
Statutory instalments
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Non-statutory instalments
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Registration of the debt as a voluntary judgment mortgage
17.1
Payment by Statutory Instalments – Section 54 CATCA 2003
Section 54 CATCA 2003 provides for the payment of tax by means of 5 equal yearly instalments where a beneficiary takes:
��
An absolute interest in
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immovable property
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agricultural property consisting of land, buildings and farm machinery
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relevant business property or
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a limited interest taken in any property.
Taxpayers may opt for this method of payment when completing their self-assessment tax return. Where the option to pay by 5 yearly instalments is exercised, the first instalment is due and payable on the 1st anniversary of the valuation date.
Where the Inheritance or Gift is comprised of both personalty (cash, stocks and shares, bank accounts etc) and real property (lands, buildings), then any tax on the former must be paid immediately, (except in the case of a limited interest) and the option of paying by statutory instalments may be availed of to discharge the liability on the latter.
Where a person takes a limited interest in property and dies before the 5- year statutory instalment period has expired, any instalments not due are written off and tax paid may be recoverable as an overpayment under section 57. This applies whether or not instalment arrangements were entered into.
Were the instalment option is availed of, interest on the outstanding tax accrues under section 51.
Revision Date: 17th June 2009 2
Capital Acquisitions Tax Manual
17.2
Payment by Non- Statutory Instalments
This method of payment is granted on a concessionary basis in exceptional circumstances where the tax liability cannot be paid without causing excessive hardship.
In arriving at a decision to allow non-statutory instalments, a case is looked at on its merits taking the following criteria into account:
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the nature of the gift or inheritance- where, for example, a sizeable part of the benefit comprises liquid assets, then an instalment arrangement is not normally approved.
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The financial circumstances of the beneficiary
The conditions applying to non-statutory instalments normally are that:
Interest continues to accrue on the unpaid tax.
Payments are applied against interest in the first instance.
Payments must be made on the agreed due date.
The arrangement is entered into on a without prejudice basis.
17.3
Registration of the debt as a Voluntary Judgment Mortgage
Payment of the tax may be postponed in exceptional circumstances, on a concessional basis. This may be allowed where payment of the tax would cause excessive hardship for a beneficiary such as, a beneficiary having to sell their home to pay the tax and where payment of instalments would not be a practical alternative. The agreement to postpone payment is subject to an agreement by the parties concerned to the registration of the debt as a Voluntary Judgement Mortgage on the property.
Interest will continue to accrue on the registered amount.
Revision Date: 17th June 2009 3

dudara

Revenue are generally quite accomodating - so if you want to keep the property and pay the tax, I'd advise ringing them and arranging a payment plan if possible.

Wantobe

Assume you were not living in the house? So you don't qualify for dwellinghouse relief.

It is possible to have the house revalued as at the valuation date if a grant of probate has been extracted since and therefore have the value as at todays market value rather than date of death- check with your solicitor or tax consultant.

Yes, you can apply to pay by installments where 'real property' is involved- ie a house or land. But it does carry interest which would be equivalent to a high personal loan rate. So you might actually be better off if you qualified for a small mortgage to pay it off and then keep up repayments on the mortgage.

Can you live in the house or rent it out?

Queencake

There are a few rude posts here from obviously jealous people. Stop being patronising to the OP. I don't blame her for feeling chestfallen about the prospect of having to sell in the current climate. Some people can be so full of venom when they hear of others receiving inhertances. Yes, she's fortunate but she stands to potentially lose a lot of money if not handled correctly so naturally she is worried.

OP, the best option would appear to be to get a mortgage and rent out the house or some rooms to cover it. Before you do anything though I'd recommend speaking to a tax consultant as others have said. Don't just take advice from relatives or friends (or internet people).

Nevyn

IF you have an issue with a post please report it rather then giving out in the thread as that is considered bakc seat modding and off topic posting.
Unhelpful and off-topic posting will get you banned from this forum.
Do take time to read the charter which contains the rulesand abide by them.
Have a nice day.
Thaedydal