Inheritance Tax Question

NandALei

Hi Everyone,

Just looking to see if my current understanding of my inheritance tax is correct, after reading through the revenue website.
So, My Dad passed away and probate has just been issued. I have one brother, we are both executors, the will divides everything 50 50. My Dad's estate mainly consists of a house, valued at approx 300k. My brother is still living in the house, no family, single. I have my own home (mortgaged), family etc.

If we put the house in both our names and then sell the house, I will be liable for CGT?

If we sell the house and put the money into my Dad's estate, then divide the proceeds from his estate, I will not be liable for any tax as the proceeds would be under the threshold?

My brother does not want to sell and says he can't buy me out, which I know is not true, he has mentioned to me before that he would have enough to buy me out.
So I'm undecided on whether to put the house in both our names or sell, obviously I want to minimize any tax liability.

Thanks for reading,
N

bobbyy gee

taxes

https://www.moneyguideireland.com/inheritance-tax-in-ireland.html#:~:text=Inheritance%20Tax%20in%20Ireland%201%20Inheritance%20Tax%20Thresholds%3A-.,4%20Late%20filing%20or%20payment%3A%20More%20items...%20

longgonesilver

Sorry for your loss.

Is your brother working?

If so does he have a job that even in current circumstances would allow him to take out a small mortgage?

As you have worked out their are no taxes owing on your inheritance If the current valuation is correct.

If you sell the house even if it made substantially more, you would not be liable for any tax.

If you put the house in joint names finalise the estate and then sell your half for substantially more either immediately or some time in the future, you could be liable for tax on the increased portion of the proceeds.

It's amazing how some people act.

As above, ask them to take out a mortgage. However, your brother also knows he is in a strong position re simply staying in the house if he wishes to be obstinate.

NandALei

Thanks for the link, very helpful.
My Dad was ill for a few years so it was expected but a shock obviously when it happened.
So I can describe my brother as a selfish man child, others would agree with me on this. We were never that close as adults, throughout my Dad's illness it was myself who'd take him to appointments etc, I had no problem with that at all, but my brother would not go out of his way one little bit.
He is working, 2 part time jobs. He has no intention of applying for a mortgage.

I agree he may not engage with me if I decide I want to sell my half, it may end up I have to send a solicitors letter.
Regards,
N

Bass Reeves

If you are not selling the house straight away you should value the house at the maximum value possible. This will limit tax if it is sold in the future.

Generally houses kept by single people and men in particular deteriorate in condition over time. Another issue if your brother meets someone and and they start to live with him they start to have habbitation rights over time.

A 150k mortgage over 25years costs about 680/month

NandALei

Yes, I can see some deterioration already, example is the house alarm, it developed a fault and needed a service call. He wouldn't pay the callout fee, now he has removed the front of the control panel and the house is not alarmed, there may be an insurance with that also.
I agree also if he meets someone.
I do feel in some ways the house may end up being a liability, maybe that's too strong a term, I mean to say I've enough looking after my house and family.
Regards,
N

Peregrinus

First of all, do not allow your decision here to be primarily driven by tax. There are bigger issues at stake. Once you have decided what outcome you want, then and only then is it time to consider how to acheive that outcome in the most tax efficient manner.

There are a few possible outcomes here:

1. House is sold, you and your brother divide the proceeds.

2. Your brother buys your half of the house from you at a fair value.

3. You and your brother continue as joint owners of the house. Your brother lives in it and pays you a market rent in respect of your share in the house.

4. You and your brother continue as joint owners of the house. Your brother lives in it and is shocked - shocked, I tell you! - at any suggestion that he should pay you a market rent in respect of your share in the house.

Option 2 seems to be ruled out because your brother doesnt' want to raise the funds to buy you out. It's irrelevant whether he could raise the funds; he doesn't want to, so it can't happen.

Option 4 is one that you would presumably rule out.

That leaves options 1 and 3. Up to you to decide whether you want to be in a landlord/tenant relationship with your brother, but it could get very fraught. Leaving aside that issue, on the one hand you might want to sit on the house in the hope of capital appreciation (yes, you'd have to pay CGT on any capital appreciation, but paying CGT means you've made a gain, which is nice.) On the other hand, the house might tend to deterioriate while occupied by your brother. On the other other hand, if what you want to do with your inheritance is have it invested in residential property which will yield a rent, then selling the house you currently (part) own only to invest in another house has high frictional costs which you might prefer to avoid.

Basically, your call. If you ask me, it looks messy, and I would avoid being my brother's landlord. But you haven't asked me, so I should mind my own business.

If you want option 1, then I would be very clear with the brother about that. When that happens, you might find that option 2 miraculously comes back on the table - your brother may decide that, if me has to raise money to buy a house, he'd rather buy this one. But be prepared for the fact that it may not come back on the table.

You may be able to think of other outcomes than the 4 described above, and you might prefer outcojme 5 or outcome 6.

Whatever. Decide what you want to achieve. Then, and only then, come back here and ask about tax efficiency.

Fol20

I would have an honest conversation with him and ask him how is he going to buy you out. If he says he will mortgage it in one year, why can’t he just do it now. If he works two part time jobs and his situation is unlikely to change, ask him how he will remortgage it next year as it sounds like he will continue to many excuses and this will actually cost you money every year whe you could pay down your own mortgage.

There is too much risk here for you especially if you want to sell it.
-if the price goes up you will be liable for cgt between the difference it was valued at when you inherited at vs when you sell
-if the price goes down due to the economy or the condition deteriorates You might loose a substantial figure
-every month he continues to live in it for free, you are paying an extra 300e in interest on your own mortgage if you have a 30years term @2.5pc.


If this will burn bridges between your brother and yourself. You can’t stop it. It’s either going to burn them now or it will burn them later on when you do sell. I would save yourself the heartache and worries of this and just do it now. If he can’t buy you out. Tell him we need to sell. If he says no. Get the solicitors involved.

IF all other options fail, could you move your family into the home and sell your own house. It would probably mean living with your brother.

NandALei

Deleted User wrote: »

IF all other options fail, could you move your family into the home and sell your own house. It would probably mean living with your brother.

Thanks for your input, but its a smaller house to my current house, so for my brother and my family to live under the one roof simply won't work.
Regards,
N

NandALei

Thanks all for your input, I really appreciate it.
I want to sell my portion of the house. As I mentioned, he said he can't buy me out, which I believe is not true.
In regards to burning bridges, I don't see him very much, only when there is anything to be done in the house, he is God Father to one of my daughters, no Christmas card/present,no Birthday card/present, I wouldn't expect anything expensive, just the thought is all I wanted.When we talk on the phone he never asks how they are, or how my wife is. Its all about him.
As I sit here reading this it makes me think again if keeping in contact is worth it, I seem to get stressed when I think of various situations which have arisen over the years.
Regards,
N

Spanish Eyes

As Peregrinus above said, taxation is the least of your concerns at the moment. This is a very common situation unfortunately which is why testators should (but don't always) direct in their will that the house should be sold and the proceeds divided amongst beneficiaries. Just mentioning this in relation to your family situation. It is not always necessary.

Anyway, if he refuses to buy you out, you have the option to leave him there and get the property registered in both your names. I strongly advise Tenants in Common not Joint Tenancy. TIC means that your half is yours and you can leave it to whoever you wish in your will. Joint tenancy means that if you died first your brother would get your half share. Well the opposite COULD happen but no point taking a risk.

The last throw of the dice is to force a sale through the courts.

NandALei

Thanks again for your input.
So bridges have been burnt now, happened pretty quick if I'm honest, but wasn't surprised.
I asked him how he felt about paying rent, he said he wouldn't pay me anything.
I told him the house will be sold. It'll probably have to go to court.
He also said I was harassing him, which I replied I wasn't, I told him I wanted to have a dialogue in relation to the will etc.

On the subject of upkeep of the house, he said he wouldn't be paying next year's house insurance as it was going to be sold and he's not putting any money into it. I'm not quite sure how to deal with that?
Regards,
N

NandALei

NandALei wrote: »

Thanks again for your input.
So bridges have been burnt now, happened pretty quick if I'm honest, but wasn't surprised.
I asked him how he felt about paying rent, he said he wouldn't pay me anything.
I told him the house will be sold. It'll probably have to go to court.
He also said I was harassing him, which I replied I wasn't, I told him I wanted to have a dialogue in relation to the will etc.

On the subject of upkeep of the house, he said he wouldn't be paying next year's house insurance as it was going to be sold and he's not putting any money into it. I'm not quite sure how to deal with that?
Regards,
N

Why wait until next year to sell the house? Insurance not a problem then.



He has a feeling of entitlement. Hard to shake that. Good luck though.

longgonesilver

The house isn't his, the estate should pay the insurance and all maintenance and other costs related to getting it ready to sell.

Money and wills seem to bring out the worst in people.