Is there CGT/CAT on joint property after death of Spouse and future sale of property

[Polly 123]

Looking for some clarification please on the following:

Spouse dies willing everything to surviving Spouse, including house and a small field adjacent that was purchased by them about 10 years after they bought house.

Am I right in thinking there is no CGT/CAT tax liability for the surviving spouse for neither home or site (bought in both names)?

Also if the surviving person decides they want to gift or sell site to son would the seller be liable for tax on any financial gain between the initial purchase price and the sale price (if sold) or has that been reset for want of a better word when the site was re-registered following death of spouse, eg paid €10k in 2000 now worth €100k is there a CGT liability on the €90k?

If the family member is gifted this site is there any CAT on it if this is their portion of a proposed inheritance .

Hope this makes sense, trying to work out which is most cost effective way of doing this.

Thanks

 

[AAAContributor]

Am I right in thinking there is no CGT/CAT tax liability for the surviving spouse for neither home or site (bought in both names)?

Yes.

No CGT arises where assets are passed to a beneficiary under a Will or on an intestacy (Ref 1).

No CAT is payable on an inheritance from a spouse (Ref 2).

if the surviving person decides they want to gift or sell site to son would the seller be liable for tax

Yes. CGT could arise on the disposal:
- by way of gift (even though no monies may have been received - known as a "dry charge" to tax), or
- sale.

If CGT does arise you should look to see if the CGT relief 'Transfer of a site from parent to child' could apply (Ref 3).

would the seller be liable for tax on any financial gain between the initial purchase price and the sale price (if sold) or has that been reset for want of a better word when the site was re-registered following death of spouse, eg paid €10k in 2000 now worth €100k is there a CGT liability on the €90k?

From a CGT calculation standpoint, and assuming the site was acquired 50/50 originally, then the surviving spouse:
1. Acquired 50% of the property at the original cost, and
2. Acquired the remaining 50% via inheritance at the market value at the date of death.

So, both the original purchase price and the market value of the asset at the date of death are required for the calculation.

Also, given that the asset was acquired in the year 2000, the surviving spouse can index the portion of the acquisition cost in 1 above for inflation (Ref 4).

There's the personal exemption of €1,270 too (Ref 5).

If the family member is gifted this site is there any CAT on it if this is their portion of a proposed inheritance .

The child can receive €338,000 before CAT comes into play (Group A threshold of €335,000 + small gift exemption of €3,000). Given that the market value of the site is a good deal less than this, then there is no CAT (assuming no other prior benefits have been received that would push the child over the limit).

Stamp duty could be due on the gift (or sale) of the site.

A site is non-residential property. Stamp Duty is paid on the value of the site at the rate of 7.5%. However, if the child was to build a house on the site a refund of 11/15ths of the stamp duty could be available (Ref 6).

trying to work out which is most cost effective way of doing this.

Definitely get professional advice on this.

The above comments are based on the assumption that the site in question is a separate site and not land that is part of the house which the individual has for occupation and enjoyment with that residence as its garden or grounds up to an area not exceeding one acre.

References:
Ref 1: https://www.revenue.ie/en/gains-gifts-and-inheritance/transfering-an-asset/index.aspx

Ref 2: https://www.revenue.ie/en/gains-gif...tance-tax-cat/what-do-you-not-pay-cat-on.aspx

Ref 3: https://www.revenue.ie/en/gains-gif...nsfer-of-a-site-from-a-parent-to-a-child.aspx

Ref 4: https://www.revenue.ie/en/gains-gifts-and-inheritance/cgt-reliefs/inflation-relief.aspx

Ref 5: https://www.revenue.ie/en/gains-gif...sfering-an-asset/what-is-exempt-from-cgt.aspx

Ref 6: https://www.revenue.ie/en/property/...idential-development-refund-scheme/index.aspx

 

[Polly 123]

AAAContributor thank you so much for taking the time to do such a well detailed reply, this is a massive help, thanks again