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Child Item

Avoiding inheritance tax

Dr Brown

A mate of mine plans to sell his house before he dies and pass the money on in cash to his son to avoid inheritance tax.

He calls it "forward tax planning".

I'm just wondering is this legal ?

Can a family member hand out 500k in cash to their son without any tax liabilities ?

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Dr Brown

my3cents wrote: »

Tricky when bank notes change and the old ones are no longer accepted.

How do you for example change a mattress load of the old style €50 for the new ones when the old ones eventually get phased out?

https://www.ecb.europa.eu/euro/banknotes/europa/html/index.en.html

Banks here will still accept Punts so old Euros should be no problem.

coylemj

Deleted User wrote: »

This suggests otherwise. http://www.citizensinformation.ie/en/money_and_tax/tax/capital_taxes/capital_acquisitions_tax.html

So when it comes to taxation matters, you take the citizen's information website as authoritative - over the Revenue's own website?

OK, let's try again. This time there is no ambiguity and by the way, the webpage quoted below (link provided) was 'published' on Jan 23rd last i.e. 7 days ago.....

CAT thresholds (post November 2011 to date)

Group A: A son or daughter of the person giving the gift or inheritance (the disponer).

Group B: A parent, brother, sister, niece, nephew, grandparent, grandchild, lineal ancestor or a lineal descendant of the disponer.

Group C: People with a relationship to the disponer not already covered in Groups A or B.

https://www.revenue.ie/en/gains-gifts-and-inheritance/cat-thresholds-rates-and-aggregation-rules/cat-thresholds-post-november-2011.aspx

spyderski

Dr Brown wrote: »

Banks here will still accept Punts so old Euros should be no problem.

No they don’t. But The Central Bank does - if you call in person, fill out a form, and provide photographic ID. Hardly an ideal situation for a tax dodger.

Fred Swanson

This post has been deleted.

Atlantic Dawn

BorneTobyWilde wrote: »

They look into peoples banks account now? WTF?

Not exactly, they will though have reports given to them by bank cashiers reporting to them if you go depositing large amounts of cash, circa €15k in one go, this is part of anti money laundering legislation.

In addition the DIRT reports from each bank account in the country go to Revenue so they will know if the amount of DIRT you are paying matches what someone would have if they had €200k in the bank that odds are you have a balance of €200k in the bank.

Flincher

Fred Swanson wrote: »

The bank of mattress reports to no one.

No, but ex's, former business partners, jealous neighbours, anyone with a grudge can report to Revenue. Folks can come up with the most imaginative ways of evading tax only to be undone by someone telling tales. Then you've a Revenue audit and a bill for multiples of your initial liability.

blindside88

Your friend and his dad should look into a Section 72 life policy. At the minute he can inherit €310,000 from his dad (either gift or inheritance) plus €3000 per year. The Section 72 life policy is effectively a life policy that pays the inheritance tax liability to revenue when the gentleman passes away. There is a cost involved obviously but worth speaking to a financial advisor about

hullaballoo

The mattress thing is tax evasion and is a criminal offence. Funnily enough, the State takes defrauding the exchequer/public purse quite seriously and people tend to get sentences so severe that they remain in the public conscience for a surprising length of time.

That said, inheritance tax is a horrible tax and it's ruthless in this country but of course the people liable for it can't go out rioting etc. because they're too busy working themselves to the bone so that their kids can give 33% of their assets to The People on their death to subsidise their free drinking water that they defecate into.

crossvilla

If the son is married and he trusts his wife he can role that up to €6k per year. The father can also gift close family friends a sum of €3k per year on the premise they will re-gift the money back to his son. The son could also buy a property and pay down the mortgage within a short number of years on a variable rate through re-gifting and other forms of payments.

Fred Swanson

This post has been deleted.

longgonesilver

Fred Swanson wrote: »

This post has been deleted.

Such as, I meant to give you a birthday present every year but kept forgetting, happy 21st birthday, here is 60000 euro tax free;)

Peregrinus

longgonesilver wrote: »

Such as, I meant to give you a birthday present every year but kept forgetting, happy 21st birthday, here is 60000 euro tax free;)

Nope. The taxable event is the giving of the gift, not the meaning to give the gift.

Peregrinus

Deleted User wrote: »

This suggests otherwise. http://www.citizensinformation.ie/en/money_and_tax/tax/capital_taxes/capital_acquisitions_tax.html

coylemj wrote: »

So when it comes to taxation matters, you take the citizen's information website as authoritative - over the Revenue's own website? . . .

I think Maryanne is correct. The group thresholds are dealt with in Capital Acquisitions Tax Consolidation Act 2003 Schedule 2. Para 1 reads as follows:

“group threshold”, in relation to a taxable gift or a taxable inheritance taken on a particular day, means—

(a) €381,000, where—

(i) the donee or successor is on that day the child, or minor child of a deceased child, of the disponer, or

(ii) the successor is on that day a parent of the disponer and—

(I) the interest taken is not a limited interest, and

(II) the inheritance is taken on the death of the disponer;

(b) €38,100, where the donee or successor is on that day, a lineal ancestor, a lineal descendant (other than a child, or a minor child of a deceased child), a brother, a sister, or a child of a brother or of a sister of the disponer;

(c) €19,050, where the donee or successor (who is not a spouse of the disponer) does not, on that day, stand to the disponer in a relationship referred to in subparagraph (a) or (b);

From memory, this is intended to cover the situation which can arise where a person dies young, unexpectedly, leaving no spouse or children, and not having made a will. Their estate will pass to their surviving parents and, typically, a few years later (on the death of the parents) will then pass to other family members, e.g. brothers and sisters of the deceased young person, or more remote relatives. The inclusion of para (a)(ii) above prevents it from being subjected to inheritance tax at low thresholds twice in a short number of years.

filbert the fox

Reati wrote: »

Of course. It's a tax at source system. They know how much you get paid and if a large chunk of money appears out of the blue, the banks will tell revenue etc. to ensure it's not proceeds of crime etc

There is no hiding money any more.

Anyway, inheritance tax is an a disgraceful excuse for tax. Should be removed.

Removed for everyone except business!

coylemj

Peregrinus wrote: »

I think Maryanne is correct...... ...

From memory, this is intended to cover the situation which can arise where a person dies young, unexpectedly, leaving no spouse or children, and not having made a will. Their estate will pass to their surviving parents and, typically, a few years later (on the death of the parents) will then pass to other family members, e.g. brothers and sisters of the deceased young person, or more remote relatives. The inclusion of para (a)(ii) above prevents it from being subjected to inheritance tax at low thresholds twice in a short number of years.

Thanks for clearing that up. The revenue used to have information sheets (one or two page PDFs) giving full details on this type of topic, now it's just paragraphs of text scattered all over the place, sometime giving conflicting info.

Maryanne, you were right!

Metric Tensor

filbert the fox wrote: »

Removed for everyone except business!

So a sole trader spends his entire life building up his carpentry business and after school his son joins the trade and works himself to the bone 7 days a week for 20 years but when the Dad dies you want the state to take 30% of the second generation carpenter's livelihood?!

Or have I misunderstood your post?

filbert the fox

Metric Tensor wrote: »

So a sole trader spends his entire life building up his carpentry business and after school his son joins the trade and works himself to the bone 7 days a week for 20 years but when the Dad dies you want the state to take 30% of the second generation carpenter's livelihood?!

Or have I misunderstood your post?

I was really thinking of the unfairness where a billion euro inheritance in business is permitted whereas a single child may have to pay 33% on inheriting the family home (over the threshold of course).
No disrespect to carpenters or other trades.

Dave147

I'm actually just flabbergasted inheritance tax is a thing, **** this country.

Peregrinus

Dave147 wrote: »

I'm actually just flabbergasted inheritance tax is a thing, **** this country.

Inheritance tax is a thing in a lot of countries.

Victor

Metric Tensor wrote: »

So a sole trader spends his entire life building up his carpentry business and after school his son joins the trade and works himself to the bone 7 days a week for 20 years but when the Dad dies you want the state to take 30% of the second generation carpenter's livelihood?!

Let's be honest here, it would be 30% after the first €500,000 of so, if it is a qualifying business. If it isn't a qualifying business, it would be 30% after the first €300,000 of so. Precious few carpenters would have a business that size, although retailers or some other small businesses might, as they are carrying stock or have property.

Metric Tensor wrote: »

when the Dad dies you want the state to take 30% of the second generation carpenter's livelihood?!

But you will happily take 52% of his wages? If you abolish the 30%, the 52% will have to go up.

Dave147 wrote: »

I'm actually just flabbergasted inheritance tax is a thing, **** this country.

You mean you pay a lower rate of tax on money you didn't earn?

Metric Tensor

Victor wrote: »

But you will happily take 52% of his wages? If you abolish the 30%, the 52% will have to go up.

If inheritance tax is abolished I realise the tax has to be gotten elsewhere. I'm not suggesting there's some magic way of getting rid of it without costing money or services elsewhere.

Reati

Metric Tensor wrote: »

If inheritance tax is abolished I realise the tax has to be gotten elsewhere. I'm not suggesting there's some magic way of getting rid of it without costing money or services elsewhere.

There is, it's called accountability with public money, something this (and many) countries don't do well with.

Money is wasted across the board.

Dr Brown

hullaballoo wrote: »

The mattress thing is tax evasion and is a criminal offence.

I don't think so half of rural Ireland do it.

hullaballoo

Dr Brown wrote: »

I don't think so half of rural Ireland do it.

Sure what would I know?

ScouseMouse

My wife is directly affected by this issue. She is an only child and her family have been in the place since the 1700's. As it stands, if the widowed mother dies, there will be a bill of about 80k. That is money we dont have.

Accordingly, the place will have to be sold. Its scandalous. She could try and build a house up there, but they wont allow planning permission.

Mod: rant deleted

cruizer101

Dave147 wrote: »

I'm actually just flabbergasted inheritance tax is a thing, **** this country.

The concept behind does kinda make sense, the idea is to redistribute a certain amount of wealth from rich to poor, i.e. get rid of the rich aristocracy that did little to actually earn their wealth. However in practice the super rich tend to be able to avoid a lot of it through trust funds, offshore companies and other legal but dubious financial practices.

[Deleted User]

ScouseMouse wrote: »

My wife is directly affected by this issue. She is an only child and her family have been in the place since the 1700's. As it stands, if the widowed mother dies, there will be a bill of about 80k. That is money we dont have.

Accordingly, the place will have to be sold. Its scandalous. She could try and build a house up there, but they wont allow planning permission.

Mod deletion

Could you not get a mortgage to cover the tax?

ScouseMouse

Deleted User wrote: »

Could you not get a mortgage to cover the tax?

Its a good idea, but don't know if we would get one. Also, is it fair for an only child be to placed in that position?

crossvilla

ScouseMouse wrote: »

Its a good idea, but don't know if we would get one. Also, is it fair for an only child be to placed in that position?

Life's unfair! That's a first world problem. You mentioned earlier you would have a bill of €80k. That would suggest the inheritance exceeds €550k or your partner has previously inherited.

You can always sell your own property tax free to cover the debt and live in the property or no longer pay rent and just service €80k on a long term loan.

Arcade_Tryer

Reati wrote: »

Anyway, inheritance tax is an a disgraceful excuse for tax. Should be removed.

hullaballoo wrote: »

That said, inheritance tax is a horrible tax and it's ruthless in this country but of course the people liable for it can't go out rioting etc. because they're too busy working themselves to the bone so that their kids can give 33% of their assets to The People on their death to subsidise their free drinking water that they defecate into.

Inheritance tax is probably the fairest form of tax in existence, much more so than income tax for example, for it attempts to eliminate the lottery of birth and the accumulation and hoarding of wealth by small sections of society.

cruizer101 wrote: »

The concept behind does kinda make sense, the idea is to redistribute a certain amount of wealth from rich to poor, i.e. get rid of the rich aristocracy that did little to actually earn their wealth. However in practice the super rich tend to be able to avoid a lot of it through trust funds, offshore companies and other legal but dubious financial practices.

The super rich will always find ways to avoid taxes. Middle class entitlement means many non-super rich people feel they should enjoy the same privilege.