Inheritance Tax From Aunts Property

...Ghost... · 02-07-2023 2:21pm #1

My Sister has been gifted a dwelling in Spain that was left to a UK based Aunt who didn't want the property, or couldn't take it over for financial reasons. The property was transferred to the Aunt when her mother passed away a few years ago. My Sister agreed to cover the cost of transferring it into her name, as well as some community fees owed in the low thousands.

My Sister doesn't work and lives in council accommodation. Not sure that matters for inheritance or not. Is she subject to paying inheritance taxes? It's worth a little less than 100k from comparing to other properties in the same street. She seems to think not, but i'm sure there would be tax due on the transfer of wealth and I think she is an idiot burying her head in the sand. How would revenue know about it if the transactions took place between the UK and Spain? She hasn't declared anything.

Geuze · 02-07-2023 2:24pm

If your sister lives in Ireland, she should read this:

https://www.revenue.ie/en/gains-gifts-and-inheritance/gift-and-inheritance-tax-cat/index.aspx

downtheroad · 02-07-2023 2:35pm

How do Revenue know anything....not worth the risk.

Your sister has a Group B relationship with your aunt. She has a tax free threshold of €32,500 for Group B (provided she hasn't had a gift or inheritance received from another Group B individual before).

She may well have a Spanish inheritance tax liability, and also an Irish one, but get a tax credit here for any tax paid in Spain.

She would be well off getting professional advice.

Spanish Eyes · 02-07-2023 2:37pm

If the beneficiary (your sister) or the donor (the aunt) is resident or ordinarily resident in Ireland then CAT (gift/inheritance tax) is potentially payable by your sister regardless of where the property is situated. That's the law around gift/inheritance tax here.

The threshold is Group B between aunt and niece. At the moment that is €32,500, so anything above that is charged at 33%

As to whether your sister decides to wing it and not pay tax, what happens when she dies, or gifts it on at some point? Spanish inheritance taxes may also be due on sister's death. If at any point your sister opens a bank account in Spain and decides to rent the property out, there is an exchange of information system in place now, so Revenue will be informed. Just pointing out some issues.

Automatic Exchange of Information on Financial Accounts (thebanks.eu)

Up to her, but believe me, the Revenue have ways.....

...Ghost... · 02-07-2023 2:37pm

https://www.boards.ie/discussion/comment/120795168#Comment_120795168

She does. I reckon at best, the CAT B applies as the favourite niece clause. She just reckons that nobody will know because the Aunt lives in the UK and the property is in Spain. Other than someone reporting her to revenue, are they likely to find out?

FWIW, I think she should be upfront and pay up.

downtheroad · 02-07-2023 2:39pm

https://www.boards.ie/discussion/comment/120795243#Comment_120795243

Favourite niece does not apply here

...Ghost... · 02-07-2023 2:43pm

https://www.boards.ie/discussion/comment/120795247#Comment_120795247

I see. I just looked into that. So it would be CAT C. Anything over €16k.

Spanish Eyes · 02-07-2023 2:47pm

Read the replies again - Group B €32,500 if aunt and niece. Favourite nephew/niece applies an increased threshold to the nephew/niece provided they worked for the donor for a certain time and other criteria.