Inheritance tax on house

Steve012

Hey guys, looking for a bit of info, my friend is living in a house that she moved into before Xmas (after her Nan passed away)

It was not her Nans house originally, her Nans aunt left it to her nan.
My friend has her Mum and 1 aunt.

Now the house is left to them.

House is worth about 400k

My friend was telling me that her Mum and her Aunt (when the house is sold) to pay 75k each as inheritance tax.

Is there anyway around this?

Any help greatly appreciated.

relax carry on

Steve012 wrote: »

Hey guys, looking for a bit of info, my friend is living in a house that she moved into before Xmas (after her Nan passed away)

It was not her Nans house originally, her Nans aunt left it to her nan.
My friend has her Mum and 1 aunt.

Now the house is left to them.

House is worth about 400k

My friend was telling me that her Mum and her Aunt (when the house is sold) to pay 75k each as inheritance tax.

Is there anyway around this?

Any help greatly appreciated.

Sorry you'll have to be more clear with the sequence of events, who owned what when and the actual relationship ships here as that has implications for CAT. CGT on the sale of the property is different.

Steve012

relax carry on wrote: »

Sorry you'll have to be more clear with the sequence of events, who owned what when and the actual relationship ships here as that has implications for CAT. CGT on the sale of the property is different.

Thank you for your reply, can I get back to you with full info thanks again

Steve

Do you mean that two daughters have inherited the house from their mother?
I'm not sure they would have to pay anything if they only inherited one house valued at 400,000.

Buddy Bubs

The mam and the aunt can inherit 335k from their parents in their lifetime without paying tax.

If they've not received inheritance before, the house can be worth max 670k before they pay tax on it.
If they've received inheritance before this, the 670k is lower, which seems the case here.

The only way not to pay it is to not take the inheritance or argue the valuation on the house is too high.

Steve012

bubblypop wrote: »

Do you mean that two daughters have inherited the house from their mother?
I'm not sure they would have to pay anything if they only inherited one house valued at 400,000.

Yes, the two daughters (my friends aunts) Are only next of kin so house went to them.

Thank you for replying.

Steve

Princess Consuela Bananahammock

Steve012 wrote: »

Thank you for your reply, can I get back to you with full info thanks again

Steve

Depends on the amount inhertied and trhe relationship.

Assumping the house is sold/valued for 400k, and there are two beneficiaries, then the value of the inheritance is 200k each, and that's the base amount used for calculation.

The daughter will pay less in tax than the niece, as they are a direct sescendent.

Buddy Bubs

Princess Consuela Bananahammock wrote: »

Depends on the amount inhertied and trhe relationship.

Assumping the house is sold for 400k, and there are two beneficiaries, each will receive 200k and that's the base amount.

The daughter will pay less in tax than the niece, as they are a direct sescendent.

It was 2 sisters that inherited. Wording was bit confusing to be fair.

Taxuser1

Get tax advice. Far from straightforward!

Princess Consuela Bananahammock

Buddy Bubs wrote: »

It was 2 sisters that inherited. Wording was bit confusing to be fair.

Than as far as I know, they're under the tax threshold.

Steve012

Princess Consuela Bananahammock wrote: »

Depends on the amount inhertied and trhe relationship.

Assumping the house is sold/valued for 400k, and there are two beneficiaries, then the value of the inheritance is 200k each, and that's the base amount.

The daughter will pay less in tax than the niece, as they are a direct sescendent.

Thank you for your reply, you have all given great advice thanks peeps.
So if it was left in turn or gifted to my friend (the daughter of one of the 2 aunts)
She wouldn't be hit by inheritance tax?

Steve.

Buddy Bubs

Steve012 wrote: »

Thank you for your reply, you have all given great advice thanks peeps.
So if it was left in turn or gifted to my friend (the daughter of one of the 2 aunts)
She wouldn't be hit by inheritance tax?

Steve.

She would be hit with much more inheritance tax than her mam and aunt

Buddy Bubs

Princess Consuela Bananahammock wrote: »

Than as far as I know, they're under the tax threshold.

Only if they haven't inherited in group a threshold before, which we don't know is or isn't the case yet. Sounds like they have though if they believe a 50% share of 400k is giving rise to a 75k tax bill each.
Rate is 33% so sounds like they have fully used up their tax free entitlements already.

Need all the info in fairness.

Seve OB

Princess Consuela Bananahammock wrote: »

Than as far as I know, they're under the tax threshold.

the point is you don't know.

was there anything else let to the people in question? expensive jewellery, cars, cash in the bank, share, etc etc.
did they get something before from their dad?

Taxuser1 wrote: »

Get tax advice. Far from straightforward!

this is really the best thing we can say here

Steve012

Seve OB wrote: »

the point is you don't know.

was there anything else let to the people in question? expensive jewellery, cars, cash in the bank, share, etc etc.
did they get something before from their dad?


this is really the best thing we can say here

I'll find out if anything was left to the aunts.
Thanks again folks.

Steve.

Atlantic Dawn

Here's the thresholds and relationship groups, should help...
https://www.revenue.ie/en/gains-gifts-and-inheritance/cat-thresholds-rates-and-aggregation-rules/cat-groups-and-group-thresholds.aspx

Seve OB

Buddy Bubs wrote: »

She would be hit with much more inheritance tax than her mam and aunt

to get creative and this is why getting the correct tax advice is worth paying for.........

assuming that no other gifts have been made or are likely to be made, the aunt could gift her sister (friend's mum) €32k value in the house and also gift her niece (the friend) €32k value in the house.

new ownerships in the house
friend €32k
friends mum €232k
friends aunt €136k

the friends now just has to pay the inheritance tax on €136k instead of €200k

there are ways to further reduce the future tax bill by proper planning...... something people don't do enough.

relax carry on

Seve OB wrote: »

to get creative and this is why getting the correct tax advice is worth paying for.........

assuming that no other gifts have been made or are likely to be made, the aunt could gift her sister (friend's mum) €32k value in the house and also gift her niece (the friend) €32k value in the house.

new ownerships in the house
friend €32k
friends mum €232k
friends aunt €136k

the friends now just has to pay the inheritance tax on €136k instead of €200k

there are ways to further reduce the future tax bill by proper planning...... something people don't do enough.

Could be construed as gift splitting with the ultimate beneficiary seen as the granddaughter of the lady who died. That would mean category C threshold applies to 400k

Seve OB

relax carry on wrote: »

Could be construed as gift splitting with the ultimate beneficiary seen as the granddaughter of the lady who died. That would mean category C threshold applies to 400k

im talking about planning for the future, not to gift it now

hence why need to speak to professional....

Steve012

Thanks so much folks, I was just talking to my friend, so The house was originally passed from sister to sister a long time ago.

The Nan of the aunts is the sister the house was "deeded too"

The Nan didn't make a will. But only next of Kin are the two aunts in the 60's

My friend is the daughter of one of these ladies.

You guys are very kind for helping. I have my own accountant for 14 years but he ain't too hot of this topic.

Taxuser1

Steve012 wrote: »

Thanks so much folks, I was just talking to my friend, so The house was originally passed from sister to sister a long time ago.

The Nan of the aunts is the sister the house was "deeded too"

The Nan didn't make a will. But only next of Kin are the two aunts in the 60's

My friend is the daughter of one of these ladies.

You guys are very kind for helping. I have my own accountant for 14 years but he ain't too hot of this topic.

An accountant is not necessarily a tax advisor. Different qualifications and although some have both, maybe they do not do private client work like this.

Cluedo Monopoly

Buddy Bubs wrote: »

The mam and the aunt can inherit 335k from their parents in their lifetime without paying tax.

I saw the word lifetime above and it made me think. Are the tax free allowances once-off?

Say I inherited a house worth 335k. Obviously no tax required there.

But say I inherited 10,000 from my uncle the following year - would I be liable to 33% on that or could I use the uncle-nephew tax free allowance (32k I think)?

Taxuser1

Cluedo Monopoly wrote: »

I saw the word lifetime above and it made me think. Are the tax free allowances once-off?

Say I inherited a house worth 335k. Obviously no tax required there.

But say I inherited 10,000 from my uncle the following year - would I be liable to 33% on that or could I use the uncle-nephew tax free allowance (32k I think)?

There’s Cat A B C thresholds
Parent/ relation /stranger

Gifts/inheritance from parent gets the top tax fee threshold.

Next down is relations at about 1/10th of the tax free amount

The categories work independently of each other in your lifetime but are aggregated over the course of same. So if you get a gift from each parent and an inheritance on debt they’re all added together.

Similarly so with everyone bar your parents who’s a relative and you can see that you can easily pass the tax free threshold for gifts and inheritance accumulated from aunts uncles brothers and sisters etc.

Buddy Bubs

Cluedo Monopoly wrote: »

I saw the word lifetime above and it made me think. Are the tax free allowances once-off?

Say I inherited a house worth 335k. Obviously no tax required there.

But say I inherited 10,000 from my uncle the following year - would I be liable to 33% on that or could I use the uncle-nephew tax free allowance (32k I think)?

No, that would be fine. It's category B from an uncle. But you can't exceed the threshold from all category B people.
Your aunt gives you 32k, fine, but then a different uncle gives you another 32k, then the second 32k is taxable.