Family home inheritance - CAT obligation confusion

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Bobby2013

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My husband, brother and sister have inherited equal 1/3 share in the family home. The sister age 62 has lived there all her life, unmarried and right of residence is in the will, she can remain there but cannot move a spouse or anyone into the house.

Probate is through and all three are now registered owners. Revenue have put form38 onto my husbands tax profile.

The PRAI would not include right of residence as a burden on the property as the sister is a beneficiary of 1/3 share. It is a term of the will only.

I have really studied the obligations for CAT purposes. We know they are each exempt under group A upto €335k threshold. Each share is €133,333 based on €400k house value if the house is ever to be sold.

My understanding is that we are obliged to return form 38 if you have inherited upto 80% of the exemption. No inheritance has been received as the house is not being sold as of now.

Due to this understanding we have not filed a return. But I read on here that the representative for the estate is obliged to file the return, regardless of the 80% this means my husband should have filed Oct 2023. Is this correct?

Is the sister and other brother obliged to complete form38 as well.? She is living there she has not claimed dwelling house exemption. I called the CAT unit and they said she will most likely be eligible for the exemption as she fits the criteria, however when I mentioned the right of residence they said she won't be eligible. I didnt get a proper explanation for this.

So confused if they all should complete the form38 and if the sister should be advising revenue of her living accommodation / she is terrified, won't contact revenue or do anything. I have advised her of revenue 10% right of residence of the value of the property... I did the workings for her.... But does she need to do this.

I would appreciate knowing if they all need to file.

So much information but confusing

I would appreciate your input greatly
 
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Your husband has inherited 1/3 of a house. This interest is subject to the sister's right of residence, which as you have already stated can be taken as reducing the value by 10% (i.e., to 120k).

The sale of the house, or otherwise is irrelevant - he now owns a 1/3 interest in it. If or when the house is sold he will potentially be liable to capital gains tax, if the value goes up in the interim.

The sister's position is that she has taken two inheritances; the first is a right of residence, worth 40k (10% of 400k), and the second is the same as her siblings, a 1/3 interest in the house, subject to the aforementioned right of residence, worth 120k.
 
Thank you, yes we have considered the CGT if it were to be sold above the valuation. Yes we understand he now has a 1/3 interest in the property along with his two siblings. I had no idea the sister is considered to have two inheritances due to the right of residence. Can you advise if she has to do anything in relation to the right of residence with revenue.... This has caused so much confusion.... Also the CAT IT38 form and receipt of 80% of threshold before making a return.... I have read on revenue it is based on valuation date. Again much confusion.... I am going to contact revenue anyway but now very anxious being few months late..... Thank you so much
 
Bobby2013 said:
. Again much confusion.... I am going to contact revenue anyway but now very anxious being few months late..... Thank you so much
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Sounds like you need professional tax advice. Revenue don't give tax advice and if you go to them for guidance they have neither obligation nor duty of care to you or any others to ensure that your respective interests are protected and that you respectively pay the minimum necessary in tax on your inheritances.
 

T McGibney said:
Sounds like you need professional tax advice. Revenue don't give tax advice and if you go to them for guidance they have neither obligation nor duty of care to you or any others to ensure that your respective interests are protected and that you respectively pay the minimum necessary in tax on your inheritances.
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Thank you. I have looked at the form and there is an area for expression of doubt which I intend to set out our confusion in submitting the form IT38. I understand that effectively inheritance has been received and on this basis I believe we are obliged to submit the form.

Thank you for the input
 
Fortune said:
An inheritance of €120k has been received. The ownership of the house has been transferred.
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Thank you yes I understand that inheritance has been received effectively and the transfer is now complete. I have sent a query to revenue and await a response however my feeling is to submit the form with expression of doubt.

Thank you for your response.
 
Bobby2013 said:

I have looked at the form and there is an area for expression of doubt which I intend to set out our confusion in submitting the form IT38.
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The expression of doubt panel is intended to facilitate the disclosure of genuine technical uncertainties regarding how specific provisions of legislation or case law should be applied in a particular case.

There has long been a general suspicion among accountants and tax professionals that an expression of doubt sharply increases the risk of a tax return being selected for Revenue audit, in which case your ability to manage this situation to any extent would rapidly disappear.

It would be extremely foolhardy to utilise it without first obtaining robust professional advice on the scenario in hand.
 
Thank you I spoke to a CAT advisor today, we are not obliged to submit a return since we are not exceeding 80% of the Group A threshold for this inheritance and have no other inheritances.

Thank you for your response
 
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