Which Type of Tax

Lucky Dub

Can anybody help/advise.......
My brothers wife recently inherited a property, this was transferred over into his wifes name.
They are now looking to rent the house out as it is down the country.

Are they/she subject to Inheritance tax or Capital Gains Tax or both?

I hope this is enough info!

I'd appreciate any advice etc.

nompere

Lucky Dub wrote: »

Are they/she subject to Inheritance tax or Capital Gains Tax or both?
.

1) Possibly
2) Probably not
3) Income tax as well
4) Go to a professional

paddydriver

You can inherit an amount before paying inheritance tax - think its in the €400k area. Don't think there is any requirement for capital gains though. If you rent it out then you will need to pay tax on that the rent received - this is classed just the same as any other income.

Hope this helps.

Do a few searches on revenue.ie - you will get good hits under "inheritance" and there is a "guide to rental income" up there too thats useful.

Yep, as previous poster advises you need to get some professional advice cause these taxes are all self assessed and if you don't sort them when due then you can quickly get in trouble with interest and penalties.

namenotavailablE

The inheritance of the house is subject to Capital Acquisitions Tax ('inheritance tax'). There is a tax free threshold, the anount of which depends on the relationship between the person whose house it used to be and your wife eg if the person giving the house was one of your wife's parents then the tax free threshold is €414799 at present. If however, it was a brother or sister, the tax-free threshold is €41480. Any amount over the tax-free threshold is taxed at 25%.
Additionally, if your wife happened to have received benefits from the 'same group' of people previously e.g. an inheritance from another parent, the tax calculation follows a 2-step procedure:

1.Calculate the tax on the sum of the current benefit + previous benefits (basically 25% of the excess over the relevant tax free threshold amount)
2. Calculate the tax on the previous benefit only (as above, using the excess-if any- over the current tax free threshold)
3. The tax now arising is the difference between value at step 1 and value at step 2.

There is also a rule- maybe a long shot- that a house is exempt from tax if certain conditions are met~ basically, your wife doesn't own/ or have an interest in any other house; that she lived in the inherited house with the person for a minimum of the past 3 (I think it's 3, maybe 5) years to look after the person; that she lives in it for the next 6 years. It doesn't sound like these rules will have been met on the basis of the information you supplied.

Finally, if the person disposing of the house paid any Capital Gains Tax on the transfer (not likely as it's a will) then your wife's CAT liability- if any- can be reduced by the amount of CGT paid.

Finally finally, as per previous posters make sure to get professional advice!