will my friend have to pay inheritance tax?

iguy

Just looking for some advice, a friend off mine who is only 24 was left a house, she wants to know if will have to pay some sort of tax,
however she has no savings and has being receiving disability allowance since she was 17, and she has been renting for the past 6 years,
she wants to move into the house to save her money and it is much more suitable for her disabilities.
The bungalow is sitting on 35 acre's(farmland) and is valued at 455K, Her brother got the animals.
Thanks in advance for your help, and feel few to ask me more questions if need be.

Victor

Is this from a parent, if so there are high thresholds before any Capital Acquisition Tax (CAT) is payable.

Is the valuation for the house or the house + farm?

She might be able to sell some/all of the land to pay any tax due.

It would be important for her to get professional advice on tax and investment. A solicitor would be a good start.

http://www.revenue.ie/en/tax/cat/gift-inheritance.html
http://www.revenue.ie/en/tax/cat/thresholds.html

athtrasna

The key is who it was inherited from? But given the value of the house, the answer is yes, regardless, though the relationship with the deceased will determine the liability level.

http://www.revenue.ie/en/tax/cat/leaflets/cat2.html
http://www.revenue.ie/en/tax/cat/thresholds.html

P. Breathnach

Not just who it was inherited from, but when. In most cases, the CAT is assessed on the basis that the transfer is deemed to have happened on the date of the death of the disponer.

iguy

Victor wrote: »

Is this from a parent, if so there are high thresholds before any Capital Acquisition Tax (CAT) is payable.

Is the valuation for the house or the house + farm?

She might be able to sell some/all of the land to pay any tax due.

It would be important for her to get professional advice on tax and investment. A solicitor would be a good start.

http://www.revenue.ie/en/tax/cat/gift-inheritance.html
http://www.revenue.ie/en/tax/cat/thresholds.html

athtrasna wrote: »

The key is who it was inherited from? But given the value of the house, the answer is yes, regardless, though the relationship with the deceased will determine the liability level.

http://www.revenue.ie/en/tax/cat/leaflets/cat2.html
http://www.revenue.ie/en/tax/cat/thresholds.html

P. Breathnach wrote: »

Not just who it was inherited from, but when. In most cases, the CAT is assessed on the basis that the transfer is deemed to have happened on the date of the death of the disponer.

Thanks for the reply's guys, it was left to her by a second cousin on her mother's side, the valuation is house and land.
The main reason why I ask is she's terrified she'll have to pay tax and she's in no position to pay it as she has no saving's etc.
If so her brother said if needed he'll try and come up with the funds to buy the land of her to pay said taxes.
Also I said she should go to citizens advice deviate would help,
she won't go to a solicitor as she doesn't have one for one.
She only comes in with 195 p/w and if all goes well with this situation she will be giving up her private rented accommodation of five years and going off the council list.
Once again thanks for the reply's and sorry for the long reply!!!
Sincerely,
iguy

athtrasna

She will need to find the money from somewhere to get proper advice and also to pay what will be a sizeable inheritance tax bill - given the distance of the relationship, the tax exempt percentage is very small.

ProudDUB

Why does someone aged 24 need a house and 35 acres of land, that presumably they can not farm due to their disability?

Why doesn't she just instruct the executor of the estate to sell the house on her behalf? She can then use the sale proceeds to buy herself a home, and get it modified to suit her needs. As her relationship to the disponer is so distant, the inheritance tax liability will be substantial. As tax liability will be deducted from the sale proceeds before the the remainder is given to her, she won't have to be out of pocket up front.

There are LOTS of houses out there. She will have a lot to choose from when all is done and dusted. Why does she have to live in this one in particular? Are their family or sentimental reasons why she wants to move into it? Even if there are, it is going to be a stretch for her do so given her tax liability and her own lack of funds to meet it. She is probably going to have to bite the bullet on that.

I inheirited a house two years ago. I didn't want to live in it, so the executors sold it on my behalf. It was all rather easy really.

P. Breathnach

The liability is likely to be substantial, of the order of [€455k -€16k] @ 30%. So she will need to raise €130k+. A bit painful! The positive way to see it is that she gets to hold on to assets worth €300k+.

Would the sale of the land cover the tax?

ProudDUB, you might note that the house seems suitable for somebody with the disability that iguy's friend has. That seem like a good reason to try to hold on to it.

ProudDUB

P Breathnach, I understand that. But with 300k in the bank, getting another house modified to suit her needs is probably within the realm of possibility, no?

I can see why she would want to keep the original house and not have to start over from scratch with a new one, but given her lack of resources to meet her tax liabilities, is that really an option?