Inheritance Tax - Complicated

Beagle1980

Hi There, long time lurker and first time poster here

I have a complex situation ahead of me, I'll give some background information and then the questions I have..

I come from a family of 4, mother, father, me & my sister,
My mother and father separated and then me, my sister & my mother moved in with my aunt ( my mothers sister ).
My aunt inherited the family home from her parents. My sister, my mother and myself moved in to this home after my parents separated - this was about 20 years ago.
My mother and father sold our original family home and split the funds between them, my mam taking half and my dad taking half.
As per the above, we (the children) and my mother moved in with my aunt, 20 years ago ( my father had full custody of us for about 4 years for some of this time ) but the vast majority of this time we lived with my aunt and mam in my aunts house.

Present day: Sadly my mother passed away suddenly last year, then a few mths ago my aunt also passed away very suddenly.
My question now is what happens to this house with regards to inheritance tax.
My aunt has left this home to me and my sister and we have lived there since we are very young, I have since moved out, got married and bought my own home. However my younger sister still lives in this house.
We have decided to sell the home in the near future (probate started) - however we are unsure where we stand with regards to inheritance tax.
I know we technically fall into the 32,500e tax free area as my aunt has left us this home.
However, I am wondering is there anything that can be done to limit our tax liability as this was our family home for so long, where we lived as a family along with my mother.
We are not due to inherit any other home coming from either my mother or father and any funds my mam got from our original family home back when my parents separated was put into my aunts house (new floors, kitchen etc).

What I would like to know is if we stand any chance at getting assessed under the parent threshold or regardless of situations above, the fact the house has come from my aunt mean we are hit with the larger tax bill.
Our solicitor mentioned that there may be some discretion that can be used based on the circumstances outlined above.

Does anybody else have experience of a similar situation? Any help or information would be most appreciated

tax_tutor1

This issue should have been identified when your Aunt's will was being drafted by the solicitor-assume the same solicitor who is acting in probate application.
There is a CAT exemption for certain residential properties passing by way of inheritance to qualifying residents of that property. There are a number of qualifying conditions- must be residing here and must not own or have an interest in another residential property etc. Any good probate solicitor should be able to advise you on this. Otherwise suggest you get a good tax consultant -you will probably need one to complete the CAT Returns for yourself and your sister.