Tax on house inheritance for son and son-in-law

bigpaudge

Hi Lads,
I'm sorry for asking if this has already been posted.

My father left his house to myself (his son) and my brother-in-law. Neither myself or my Brother-i-L live in Ireland. My sister passed away in 2012, my BiL has the two young kids now, I have no other siblings.

I understand that my BiL will have to pay a higher rate of inheritance tax than I, is that true? What taxes or levies could ensue after the will has been declared? I don't think keeping the house is a good idea although it would be the only asset I will ever inherit from my family.

I would be very grateful for information on this complicated topic?

Thanks a lot.

Atlantic Dawn

Sorry for your loss. Yes your brother in law would have a much lower threshold that they would be exempted from taxes for, they would pay 33% tax on the balance over the threshold amount.

You as his son would fall in to category A €280,000
BIL would fall in to category C €15,075

http://www.citizensinformation.ie/en/money_and_tax/tax/capital_taxes/capital_acquisitions_tax.html

bigpaudge

Hi thanks for the reply and the link, sorry about asking again, I find it all a bit confusing even with the explanations on that site.

If the house sells for 250K, we split the amount 125 each. What percentage would we pay on that? Is there any advantage to leave the share to my dads Grandchildren (our kids)? My father is still alive by the way (87). I am just trying to work out the best solution for us all before his time comes.

Thanks very much for your answers.

Mary63

You won't pay any Tax on the inheritance bigpaudge,your inheritance limit before tax kicks in is 310,000 euros.

Your are in Group A as it is your father leaving the money to a son.If your Dad leaves money to your children they are in group B,this means they pay tax on any inheritance over 30,000 euros.This figure may have increased slightly since the budget.If your Dad leaves money to the children of your deceased sister they could inherit under Group A,which means the threshold would be 310,000 euros.The tax rate is 33% once you are over the tax threshold,this is a substantial amount to pay.

The inheritance tax is due though on everything your father has given,its not just due on the proceeds of the house.This means if your father gave your money for any other reason this will be calculated too when his will is probated.Your father can only give you three thousand euros every year tax free before money is counted for inheritance tax.

bigpaudge

Thanks Mary. Aside from the money from the sale of the house... any bank accounts or credit union savings, these will be given to the Grandchildren, is that taxable?

The_Pretender

I would recommend talking to a tax adviser on this, especially considering the amount of money you're talking about.

I don't know all of the ins and outs of inheritance tax, but there may be a possibility of your brother in law being entitled to his share of the sale tax free under your sister's estate, as long as it's below threshold for Group A. If not, then I do believe Mary is correct in saying that his children should be entitled to the Group A threshold.

As advised by Mary, the threshold considers all money given from parent to child in excess of €3,000 in any given year. So if your father gave your sister money towards a deposit for a house etc. that will be taken off the total tax free allowance.

In regard to the bank accounts, it's the same as the house. It all comes down to the value. If it's below the threshold for the group they fall under, then it's tax free.

scheister

IIRC and this is from the top of my head.

there is something about stepping into the shoes of a deceased spouse in certain cases. cant remember if its for inheritance or gifts. This way it falls under class A so you get the higher limit. any gifts from your parents/step parent up to that date will reduce the limit

Mary63

I would definitely consult a tax adviser big paudge.

And yes,every bit of financial assistance given to you or the children will be taken into consideration for tax purposes and it will all be counted towards the threshold and after that tax will be due and has to be paid fairly quickly or else penalties will apply.

You could also ask your father to transfer three thousand euros to you this year and every year until he passes,this money is not liable for tax.Im not sure how much he can gift his grandchildren tax free annually.

ETA,should your father need nursing care and wants to apply for a bed under the fair deal scheme the HSE will charge 7.5% of the value of the house for a maximum of three years(each Year).He will be allowed to keep 36,000 euros of his savings but the HSE will look for 7.5% of the balance for each of the three years in the nursing home as well.He might want to start giving some of this cash to you and his grandchildren now because the HSE will look for Bank transactions and any transaction which took place less than five years before a Fair deal agreement is in place can be questioned,i.e. you can't get rid of your money just before you take up a bed in a nursing home.

TitianGerm

scheister wrote: »

IIRC and this is from the top of my head.

there is something about stepping into the shoes of a deceased spouse in certain cases. cant remember if its for inheritance or gifts. This way it falls under class A so you get the higher limit. any gifts from your parents/step parent up to that date will reduce the limit

I think your right here scheister. If your Parents left an inheritance to you and your sister both would fall into the Group A band. Seen as your sister has passed away your sisters husband moves into the Group A threshold.

Another point to make is that a grandparent can leave an inheritance to a minor child of a deceased child and that grandchild will also fall into Group A threshold.

Again I would advise you to speak to an Accountant as they can advise of all Thresholds and reliefs that may apply in your circumstances.

dogsears

Mary63 wrote: »

Im not sure how much he can gift his grandchildren tax free annually.

3000 each.

And he can give 3000 to you and me and Donald Trump as well if he likes. The small gift exemption is 3000 from any person A to any person B each year.