Inherited house

Bandana boy

Ronney wrote: »

If you think that is bad, My brother and I our in our 20's. 1 Just Finished college, 1 just a few years working. Lived in the Family home in Dublin all our lives, 2nd Parent tied a few years back and were landed with a 100K tax bill for the house.

Were not exempt from it due to dwelling relief as we also inherited a 1/12 each share in what was originally a grandparents house down in Kerry but being shared between siblings as a holiday home since he passed (the holiday house is wort €150K tops)

I am sorry for your loss
Go to Bank get a 30 year mortgage , Even with little income on 14% loan to value they will throw the money at you
It will cost you each about €50 a week to have a 50%share in a €700K house. Does not seem particularly unfair , Losing the love and guidance of a parent aside , I know about 95% of Kids in their 20s starting out in life would love to be in that position.

Ronney

1874 wrote: »

If you were landed or handed a 100k bill, thats 50k each, relatively speaking not much, does that not mean you inherited a value of approx 860k value? or thereabouts in todays terms. The CAT threshold has decreased since 2009 annually until a few years ago. It seems there might have been other ways that could have been reduced.
If this occured recently, to pay any CAT, inheritance would have to be greater than 311k per person meaning the amount it exceeded the threshold would have to have been 300k+, on top of having an inheritance elsewhere, its hardly what Id describe as bad.

Correct me anyone if Im wrong, but the CAT threshold for children is 311k per inheritor? (so a parent could pass an inheritance to each child up to the CAT threshold?) is that total in lifetime to the inheritor OR total from one person, ie could someone inherit 311k or the threshold limit off both parents? or if someone else became the inheritors legal gaurdian/parent.

Ive already mentioned above, that I think the inheritance threshold is too low should be at least 500k per person, I belive it was around that or more in 2009 when it started falling year on year, but it is what it is now.

CAT was 225 each at the time (or 450 for 2), I wouldnt describe our situation as bad but it seams crazy to me that you can be essentially be forced out of your life time home over a tax bill. The 2nd Holiday Home is owned between a number of Aunts and Uncles and difficult to sell (used by about 20 families between Uncles and Cousins etc.) The fact we inherited this share too gave rise to the Tax Bill as we had an interest in a 2nd property.

Water John

The value of the 2nd property should have been, extremely low, as you could not dispose of it.

AMTC, if your mother, the owner transfers the property to you but keeps a right of residency for herself and her husband. The property can have its value discounted. Little CAT for you.

knipex

beauf wrote: »

Tax due?

That would be the tax the owner paid on wages to pay a mortgage, then the tax on the mortgage, tax on everything to do with keeping a house. But when you die you still own tax.

Must pay the tax about 10 times on a property.

No you don't. The person who inherited the asset, without having worked for or earned it has to pay tax...

knipex

The_Conductor wrote: »

Also- keep in mind- if the current owner of the property requires nursing home care in their latter years- 22.5% of the value of the property may be due to the HSE in satisfaction of nursing home care bills- wholly independent of any other taxes or charges due...........

I really dont understand the complaints about this.

The tax payer should pay to keep your parents in a nursing home so they can leave a large valuable asset to you ???

The state taking a small sake in an asset in return for as long as required nursing home care, is in my eyes, a bargain..

Your parent or parents get to keep the asset while they are alive..

You don't have have to pay the nursing home bills.

What could be fairer ???

Ace2007

Water John wrote: »

The value of the 2nd property should have been, extremely low, as you could not dispose of it.

AMTC, if your mother, the owner transfers the property to you but keeps a right of residency for herself and her husband. The property can have its value discounted. Little CAT for you.

if the mother transfers the property to her daughter, the mother will have to pay CGT and the daughter stamp duty, depending on how much the other paid for the property, she could have a very sizable CGT to pay.

Water John

Only way to know is to do the sums. Odds are it wouldn't be high.

Marcusm

Ronney wrote: »

If you think that is bad, My brother and I our in our 20's. 1 Just Finished college, 1 just a few years working. Lived in the Family home in Dublin all our lives, 2nd Parent tied a few years back and were landed with a 100K tax bill for the house.

Were not exempt from it due to dwelling relief as we also inherited a 1/12 each share in what was originally a grandparents house down in Kerry but being shared between siblings as a holiday home since he passed (the holiday house is wort €150K tops)

Did you get any tax advice? It might have been possible to disclaim the inheritance of part of the holiday home in order to qualify for dwelling house relief.

Sorry for your loss.

Ace2007

Water John wrote: »

Only way to know is to do the sums. Odds are it wouldn't be high.

Big Family house worth 600k, probably bought 20+ years ago, even allowing for indexation, your probably looking at a gain of 400k?, so 33% of that is around 130k, rough calcs, and then the daughter pays stamp duty of say 6k, throw is 2 solicitors as required - probably 20k- so all in all 150k.

Electric Sheep

Lorelai Quick Drum wrote: »

This sounds like a terrible idea financially. Sell the family home and rent a house with the proceeds leaving no property to leave for their children.

Also I strongly suspect many people would not like to live in one of these communities but much prefer to stay in their own home. Look how big a deal it is for people who are dieing to be let home to their own home to do so.



Exactly the same in my family, both my parents "home houses" are lived in by close relations.. One by my aunt and her family and the other by my uncle and his family. In fact all the family homes in my area have one of the children living there and the other siblings then built their houses beside the home house.

Many of these communities are so very nice that they are hard to get in to. I know many people who are living in them and loving it.

Americans differ from Irish people in that they plan for their retirement, rather than holding out until they can no longer live at home and have to go to some crappy room in a nursing home.

By the way, in the good retirement communities, you buy your home, not rent it. My DH and I fully intend to sell our current homes and buy an apartment in a nice retirement community when we retire.

beauf

knipex wrote: »

No you don't. The person who inherited the asset, without having worked for or earned it has to pay tax...

They likely worked for it a lot more than the Govt will have for their slice.

1874

beauf wrote: »

They likely worked for it a lot more than the Govt will have for their slice.

And the reason why I think the threshold should be increased to 500k outright and increased steadily to 1 million. The Govt of the day/State can fritter away billions in stupid waste, I'd prefer manage my own finances, anyone that inherits around a threshold of 500k-1million should not be in significant need of financial support off the State, will be less likely to become indebted with ongoing costs and can more easily use that situation to better their lot.
The transfer of wealth from generation to generation has helped the super rich maintain their wealth and thats where inheritance tax should mainly apply, why should it not allow ordinary citizens maintain the wealth they generated for their descendants to better their lot, up to a point of course. I think that threshold should be set near the level at which a person would not need to work to fund costs at average wage levels, 30 years at 34k is just over a million, anything above that on a sliding scale, and not necessarily increasing for certain bands, so maybe 33%/current rates between 1-2 million, and possibly a lower rate from 2-5 million to incentivise people not taking their money elsewhere where there may be a better rate. Or at least some thought instead of an increasing rate as the amount increase, or what do the supporters suggest when it gets to a certain value if its not a variable sliding scale? just take 100% at certain levels??

Im sure the rich will find ways to avoid it, but inheritance tax should not affect people on average wages, its not like there isnt a tax on virtually everything else.
Instead of funneling peoples hard earned money into wasteful projects and ill considered, mismanaged Depts, people could be incentivised into funding social housing, why doesnt the Govt set up some kind of REIT to fund elderly care homes or housing generally?? savings schemes have been popular in the past and it would encourage people to do something useful with any savings on social projects rather than being left to gain 0.01% in some account.

Peregrinus

1874 wrote: »

The transfer of wealth from generation to generation has helped the super rich maintain their wealth and thats where inheritance tax should mainly apply, why should it not allow ordinary citizens maintain the wealth they generated for their descendants to better their lot, up to a point of course. I think that threshold should be set near the level at which a person would not need to work to fund costs at average wage levels, 30 years at 34k is just over a million . . .

This is not good public policy. We want people to work. Deliberately structuring the tax system to maximise the number of people that don't have to work will lower productivity (which, among other bad outcomes, will lower incomes, which will lower income tax revenue, which will increase the pressure to raise revenue from other sources, which will make for higher inheritance taxes . . . ).

The_Conductor

knipex wrote: »

I really dont understand the complaints about this.

The tax payer should pay to keep your parents in a nursing home so they can leave a large valuable asset to you ???

The state taking a small sake in an asset in return for as long as required nursing home care, is in my eyes, a bargain..

Your parent or parents get to keep the asset while they are alive..

You don't have have to pay the nursing home bills.

What could be fairer ???

I'm not complaining- I do think its a bargain- however, the point I was making is that there are a lot of people out there who don't seem to know how the scheme works- and assume they are 'entitled' to have nursing home care (or whatever else) handed to them on a silver platter- and their assets should be ringfenced for them to with as they please.

We're now proposing to move the old age retirement out to 70- fully 8 years earlier- and to means test the contributory old age pension (though this aspect hasn't been picked up by the media just yet).

I am arguing that the rational thing for everyone to do- is spend a couple of grand on good financial and tax advice- to include inheritance planning- an integral part of which has to be retirement planning.

The generation of workers now in their 40s- are never going to be able to retire in the manner their parents took for granted- and as for the nippers in their 20s and 30s- I fully assume by the time their time comes round, formal retirement will have been abolished.

Planning- with your eyes wide open- is what I am advocating people do- not screw the taxman or the system- but know the system and how it works, and what is best for them, in their own unique and individual manner.

I.e. people need to educate themselves- rather than assuming they will be handed anything on a plate.

1874

Ace2007 wrote: »

Big Family house worth 600k, probably bought 20+ years ago, even allowing for indexation, your probably looking at a gain of 400k?, so 33% of that is around 130k, rough calcs, and then the daughter pays stamp duty of say 6k, throw is 2 solicitors as required - probably 20k- so all in all 150k.

Another reason why the State is happy to tamper with the market supply, more people fall into the CAT category.

Peregrinus wrote: »

This is not good public policy. We want people to work. Deliberately structuring the tax system to maximise the number of people that don't have to work will lower productivity (which, among other bad outcomes, will lower incomes, which will lower income tax revenue, which will increase the pressure to raise revenue from other sources, which will make for higher inheritance taxes . . . ).

How are you jumping to the conclusion that someone will not work in that situation? and why is work essential? maybe they could do partial employment and do something of personal or social value other than eking out an existence in a job they hate that has little benefit to society, how is that productive? just because they are doing a 39-42hr week? has it improved our society so far??
I read of talk of automation and reducing the need for people to work, but that doesnt mean they wont do something of value? too much time is given to working an entire lifetime, more time should be set aside for personal interest/wellbeing, family, society than checking the box of completing the prerequisite hours thats deemed acceptable by the state.
People on an ordinary wage generally dont have spare finances to fund what they require now, every additional service has to be paid for, but with each additional tax on your paypacket an no services in return, Id be happier to fund my childs future costs from my hard earned money, because I know they are going to have it tougher than even I had it in some regards. If I was a multi millionaire, Im guessing I wouldnt be too happy either but I could see that I could still afford to transfer a certain amount of wealth I generated to get them on their feet so they dont need to be reliant on the state or be in hock to banks all their life.

The state is happy to put their hands into our pockets for taxes, I understand and agree that is necessary and services have to be paid for and Id be much happier with a Finnish or Scandinavian system of higher taxation, where I get something for my paid taxes and I can see a breakdown and it is ring fenced, not like here, where we have high taxation and taxes on virtually everything yet if I need to avail of services paid for by my taxes or social contribution that those services dont exist or Im unable to avail of them or the services are hugely inefficient and ineffective, essentially so peoples hard earned crust (after they have paid taxes) can be wasted on political pet projects, quangos and appointments and wasteful spending in Govt depts, where access to funds generated by my hard work (and others) is going.

knipex

beauf wrote: »

They likely worked for it a lot more than the Govt will have for their slice.

So its Ok for someone to get €500K or a 500K asset for nothing (inheritance) and pay no tax but someone goes out and works to earn money and pays 50% ???

In what reality ???

beauf

knipex wrote: »

So its Ok for someone to get €500K or a 500K asset for nothing (inheritance) and pay no tax but someone goes out and works to earn money and pays 50% ???

In what reality ???

In the reality that the Govt did nothing to earn it.

knipex

beauf wrote: »

In the reality that the Govt did nothing to earn it.

And what did they do to earn income taxes ? or vat or excise duty ?

That's a nonsense argument..

Governments don't "earn money", they supply services are raise taxes to fund those services..

Ace2007

beauf wrote: »

In the reality that the Govt did nothing to earn it.

technically they could say the growth in the house price is due to their policies, there are areas in Ireland that house prices are cheap - cause there is no investment or government incentives for business to open up shop.

beauf

knipex wrote: »

And what did they do to earn income taxes ? or vat or excise duty ?

That's a nonsense argument..

Governments don't "earn money", they supply services are raise taxes to fund those services..

Its your logic that an entity or person HAS to do work, provide services to receive something. Not mine.

knipex

knipex wrote: »

So its Ok for someone to get €500K or a 500K asset for nothing (inheritance) and pay no tax but someone goes out and works to earn money and pays 50% ???

In what reality ???

It's too the reality in many counties around the world where gifts and inheritances are not taxed.

That was already taxed at up to 50% when the parents earned it and they should be fully entitled to give it their their family tax free. The gov and "society's" grubby hands have no place involved in a family's money.

Also I don't get this impression that people who inherit don't work, it's nonsense.

beauf

Ace2007 wrote: »

technically they could say the growth in the house price is due to their policies, there are areas in Ireland that house prices are cheap - cause there is no investment or government incentives for business to open up shop.

A person could claim they had a contribution to the family unit. The issue here is the lack of recognition of the significance of a family unit, or the double taxation.

Basically we or the govt can make any arbitrary rule or tax they want. Its really down to politics if its accepted by society at large or not. The issue then is that its doesn't effect very many people. So peoples opinions are bias on that basis.

knipex

Lorelai Quick Drum wrote: »

Also I don't get this impression that people who inherit don't work, it's nonsense.

Where did I or anyone say that ???

Why should handed over, given, inherited income and assets be any less liable for tax than earned wealth?

If nothing else from a social argument it is an extremely progressive tax and works against inequality..

knipex

beauf wrote: »

Its your logic that an entity or person HAS to do work, provide services to receive something. Not mine.

WTF ???

knipex

beauf wrote: »

The issue here is the lack of recognition of the significance of a family unit, or the double taxation.

WTF has a family unit got to do with the transfer of assets ?

How is it double taxed ? The person inheriting is only taxed once on the asset..

beauf wrote: »

Basically we or the govt can make any arbitrary rule or tax they want.

Errr. yes...............

beauf wrote: »

Its really down to politics if its accepted by society at large or not.

Now you are getting it.. Its called democracy...

knipex

knipex wrote: »

Where did I or anyone say that ???

Why should handed over, given, inherited income and assets be any less liable for tax than earned wealth?

If nothing else from a social argument it is an extremely progressive tax and works against inequality..

By your logic a husband and wife should be taxed on money changing hands between them?

I would consider parents sharing money to their children as being the same as a husband and wife sharing money between them, its family and money should be theirs. The only "social" argument is people who don't do well complaining that other who did well have money to pass on. Its begrudgery at its finest.

The comment about people who inherit not working was not directed at you, another poster made a comment to that effect.

Electric Sheep

Lorelai Quick Drum wrote: »

By your logic a husband and wife should be taxed on money changing hands between them?

I would consider parents sharing money to their children as being the same as a husband and wife sharing money between them, its family and money should be theirs. The only "social" argument is people who don't do well complaining that other who did well have money to pass on. Its begrudgery at its finest.

The comment about people who inherit not working was not directed at you, another poster made a comment to that effect.

Such a pity the government does not consult you on what you consider family money.

1874

knipex wrote: »

So its Ok for someone to get €500K or a 500K asset for nothing (inheritance) and pay no tax but someone goes out and works to earn money and pays 50% ???

In what reality ???

Well they didnt get it for nothing, for eg in the case of a parent to earn it , they will have contributed taxes during their lifetime, they will have raised a person to participate in society who is as likely to contribute as they, its less likely that child will sit on their laurels as an adult. The parent will have made family sacrifices too, to enable this situation to occur.

I do think super wealth should be taxed to discourage huge generational wealth transfer, but this is the kind of thing that has occured and the ordinary working person is treated to the opportunity to pass what level is dictated to them.

The State has a history of wasting tax payers money, I think it is reasonable that a parent can pass an inheritance to a child tax free, up to a point, I think 500k is a starting point (and in the last decade it was around that level) but up to a million for people on average wages is not exceptional. Why would anyone be so opposed to passing earned wealth by a parent to their children, that they generated after taxation, after contributing to society already?
In a time when the State doesnt provide many of the essentials, why would a parent be forbidden to make arrangements to ensure their offspring wont be slaves to debt at the start of their lives? Im thinking , housing, education, healthcare.
The super wealthy who have wealth above that level can already have the means to reduce the ability of the State to access generated wealth as tax.
Why should those at the lower end of the scale be subjected to a high tax at a low entry level on their generated wealth?

Why not just make it 100% tax on 100% of generated wealth, because its just about taking as much as they can get without upsetting the apple cart so much it causes problems.

As for if it doesnt come from inheritance taxes, it will come form other taxation, well how about it coming from organisation, improvements, efficiency, rather than simply throwing taxpayers money at problems and still end up with bad services? because its not their money they are happy to spend it, who wouldnt.
On a household budget, when I didnt have money coming in at the same level as I had previously, I had to make cuts, I didnt go out and rob my neighbours to maintain a car or some luxury I couldnt afford, I made cuts in my spending where I could.

knipex wrote: »

And what did they do to earn income taxes ? or vat or excise duty ?

That's a nonsense argument..

Governments don't "earn money", they supply services are raise taxes to fund those services..

As mentioned, the services provided are often inefficient and wasteful, less money could be spent providing health, education and housing to a better standard if it wasn't for vested interests holding sway over those making decisions on how to spend OUR money.

beauf

knipex wrote: »

WTF has a family unit got to do with the transfer of assets ?...

There are a whole range of benefits and entitlements and tax specific to families. Most of which have no requirement to have EARNED them.

Marcusm

Lorelai Quick Drum wrote: »

It's too the reality in many counties around the world where gifts and inheritances are not taxed.

That was already taxed at up to 50% when the parents earned it and they should be fully entitled to give it their their family tax free. The gov and "society's" grubby hands have no place involved in a family's money.

Also I don't get this impression that people who inherit don't work, it's nonsense.

Most inherited wealth in Ireland derives from untaxed gains arising on PPRs which might have been initially funded from taxed income (mortgage payments). In most cases, the income applied 40 years ago or more will have been for 1/20th of the inheritance.