Inheriting a property

Heighway61

I've inherited a house from a parent. It would be under the threshold for inheritence tax. I own my own house and intend to sell the inherited house. The valuer has said I will pay CGT on the difference between the value of the house at time of death and the actual sale amount.

Is this correct? My cursory reading was that I pay the tax in the whole sale amount.

Oscar_Madison

I assume as you say, you’ve inherited tax free ie the property is under any tax threshold for a child inheriting from parent?

So now you have an asset that in todays market is rising in value. You’ll only pay CGT on the difference between what the property was valued at at time of death and what it will sell for now (assuming that’s a greater amount)

CGT= Chargeable gain - so taxes on amount property rose in value since death.

But just make sure no CAT owed in the first place but looks like you’ve done that

Atlantic Dawn

Yes they are correct, say house is valued at €200k and you inherit, then sell it for €250k, you will pay CGT on the €50k gain only. This is assuming you have not already received inheritance from another parent.

If you intend to sell it right away there is no point at all in putting the home in your name, just sell the home and get the proceeds. If you put it in your name and then sell you could be looking at circa €10k in costs in having new deeds drawn up and estate agency fees, if selling right away it would just be the agency fees.

Heighway61

https://www.boards.ie/discussion/comment/121244801#Comment_121244801

It would be under the threshold yes. That's good to hear. I thought, obviously wrong now, that i would pay CGT on the whole sale amount as I already own property.

Oscar_Madison

https://www.boards.ie/discussion/comment/121244833#Comment_121244833

Your principle private residence is exempt from CGT excepting for some exceptions.

As long as you’ve paid or don’t own CAT on the inherited property, then it’s just any gain in price since death that will merit tax.

Donald Trump

The property does not have a threshold for inheritance tax. You have your own thresholds. They are lifetime amounts.

Generally, if inheriting in a situation where you know that you won't be inheriting any further in that category, you would be trying to maximise the valuation within reason. That might be water under the bridge for you.

DubCount

They are correct.

Think of it this way. Lets say the value of the property at the date of inheritance was 250k. That's basically seen as the same thing as getting an inheritance of 250k cash and then going out and buying the property. You were liable to inheritance tax (CAT) on the 250k whether you received it as cash or property. Its below the threshold, so you dont pay any inheritance tax on it. For CGT, you're deemed to have paid 250k for the property in the same way as if you had inherited the cash and then paid for the property. You only pay CGT on the difference between what sell the property, and what you are deemed to have paid for it.

amacca

Out of interest, say you inherited a property valued at 200k and were under your lifetime limit ....but subsequently added solar panels, insulation etc...let's say invested 50 k and it then made 240k at time of sale....do you pay cgt on the 40k or are your costs taken into account/offset-able?

Heighway61

https://www.boards.ie/discussion/comment/121244817#Comment_121244817

How would a solicitor feel about selling without a deed transfer? It would mean them missing out on fees.

Atlantic Dawn

https://www.boards.ie/discussion/comment/121251120#Comment_121251120

That's business, feelings shouldn't come in to it. They can still have fees handling the legal aspect of the sale on your behalf. A while since I know someone transferring deeds but I believe that time it was circa €3k which is unnecessary seeing as you are selling it right away, additionally there's the risk with the turnaround time to get the updatted deeds that property prices could slip causing you to miss out even more.

Leg End Reject

https://www.boards.ie/discussion/comment/121251089#Comment_121251089

You can offset the costs incurred in updating the property as far as I'm aware.

You and the OP can also offset estate agent and solicitor fees, i.e., all selling costs. Funeral and probate costs are deductible too if applicable.

CGT is only payable on any profit if the value of the inheritance is below your group threshold.

Firblog

https://www.boards.ie/discussion/comment/121244817#Comment_121244817

Surely the OP does not need to get new deeds drawn up, he inherited the house, so the house being transferred to his name is done as part of the process - without any cost.

Leg End Reject

https://www.boards.ie/discussion/comment/121252174#Comment_121252174

You have to pay land registry fees and a solicitor if you use one.

Nothing is free!

Heighway61

https://www.boards.ie/discussion/comment/121244817#Comment_121244817

Would you happen to know how this works? How to sell without having title deeds in my name? My solicitor is not answering any of my questions.

Claw Hammer

Who is the personal representative? The personal representative can assent the house to the purchaser and put the cash into the estate and then pay you. There does not have to be an assent the hose to you and then a deed of transfer to the purchaser.

Donald Trump

https://www.boards.ie/discussion/comment/121251385#Comment_121251385

CGT is only payable on any profit if the value of the inheritance is below your group threshold.

Are you sure that that is correct?

You will be assessed for CAT based on the date you inherited the property. I would have thought that then fixes that value in stone and going forward, you would be assessed for CGT - if any capital gains - referenced against that fixed price.

So that in the event you inherit a property worth around 200k, and you have the full higher category threshold which you won't be using ever again, then the smart thing to do would be to try to get the revenue to accept a higher valuation for CAT purposes.

Leg End Reject

https://www.boards.ie/discussion/comment/121441549#Comment_121441549

If you inherit a house from a parent worth 300k you are below the threshold and have no liability.

If you sell the house in 5 years and it sells for 500k you are liable for 33% of the value over your group threshold of €335. The extra 200k in value is a gain, but 35k of that is exempt because it's included in the group threshold of an inheritance from a parent. You can also deduct any probate, funeral and selling costs to reduce the liability.

As soon as the solicitor completes the deeds transfer they will inform revenue and revenue will seek any tax due immediately. In the case of a family home they will give you 5 years to pay the amount owed plus interest.

Throwaway23

If I leave a house to an adult child or buy them one under the tax free limit and it becomes their first and only residence, are they still liable to tax on the future 'profit' if they sell it? They will never be in a position to buy a home otherwise.

Leg End Reject

https://www.boards.ie/discussion/comment/121442764#Comment_121442764

No, not once it's under the threshold limit, but if they inherit when you die they will be liable once they exceed the threshold.

Donald Trump

https://www.boards.ie/discussion/comment/121442685#Comment_121442685

Can you cite a reference? I think you are wrong. I think you would be liable for CGT on all the gain (200k)

holliehobbie

https://www.boards.ie/discussion/comment/121415960#Comment_121415960

Are you the Legal and Personal Representative? Then you can sell the house without it being put into your name. Or, as I see in work everyday, whoever is the LPR sells the house. It’s a lot easier than waiting to have the house transferred into your name and the names of any other beneficiaries.

ULEZ23

https://www.boards.ie/discussion/comment/121415960#Comment_121415960

He does in his ar5e. @Atlantic Dawn is the king of Google, no real life experience at anything other than rehashing Google searches (which 50% of the time are wrong). You don’t get to live life and post that many posts on boards each day.

Heighway61

https://www.boards.ie/discussion/comment/121444120#Comment_121444120

I am the executor of the estate but still waiting for grant of probate.

Geuze

https://www.boards.ie/discussion/comment/121442764#Comment_121442764

There is no tax on any gain from selling a PPR.

If your child lives in the house all the time, and then sells it at a gain, there is no CGT.

Geuze

https://www.boards.ie/discussion/comment/121443254#Comment_121443254

You are confusing CAT and CGT.

Once the child lives in the house that they have received, then any future gain on sale is exempt from CGT.

Leg End Reject

https://www.boards.ie/discussion/comment/121444522#Comment_121444522

If that poster buys their child a house for 300k, then bequeaths 100k, that's a total of 400k. Would they not have a liability as it's above the lifetime threshold of 335k?

Donald Trump

https://www.boards.ie/discussion/comment/121445020#Comment_121445020

He said "lives in it".

No CGT on your own home

Leg End Reject

https://www.boards.ie/discussion/comment/121445031#Comment_121445031

I didn't say tax would be due on the home. The child received 300k (below the 225k threahold) to buy the home and it's their PPR.

The parent bequeaths another 100k in their will, that's a total of 400k, 65k over the threshold. That 65k is taxed at 33%.

Geuze

If I leave a house to an adult child or buy them one under the tax free limit and it becomes their first and only residence, are they still liable to tax on the future 'profit' if they sell it? They will never be in a position to buy a home otherwise.

The question above is what I am answering. See post 18.

The answer is a clear no.

The adult child does not owe CGT on any gain made from seliing a house that the adult child inherited or was gifted previously.

Leg End Reject

https://www.boards.ie/discussion/comment/121445337#Comment_121445337

I had already said that, but if the child is gifted a house while the parent is alive they might have a liability if they inherit later.

Donald Trump

https://www.boards.ie/discussion/comment/121445337#Comment_121445337

You need to be more clear as to whether you are referring to the case where the child lives in the inherited house or not.

If the child inherits the house valued at 300k at the time, rents it out for 10 years, then sells it for 400k, I believe they would be liable for CGT on 100k. Not 65k

Similarly, if the child inherits the house valued at 300k at the time, rents it out for 10 years, then sells it for 200k, I believe they would have a 100k capital loss which could be offset against other losses. @Leg End Reject appears to imply that the value of the inheritance is retrospectively adjusted instead............which would mean that in the latter scenario, it wouldn't be a capital loss, but rather a reduction of their usage of their CAT lifetime allowance.