Tax on will

[noel123ie]

Hi all

Some advice on a tax issue I currently have would be great

My mother passed away in November 2009 and left a property in a fixed trust for me my sister and brother.

We were advised but just wanted to confirm that rate applicable for inheritance tax purposes will be rate as of November 2009 and not rate as applicable on date of sale. We were going to get 2nd opinion but I thought this was a great forum to post our question.

As a side note the house is currently valued at 500-600,000 and we can either try and seill it now or hold off for 2-3 years and hope that property prices willl increase. You can see where tax rate appicable is very important as any raise in house price could be wiped out by tax hike.

Thanks
Noel

 

[Nige]

You are correct, the tax applicable on your inheritance (if you exceed the threshold) is calculated at the rate on the date of death.

However, the tax on any gains will be the rate applicable on the date of sale.

 

[noel123ie]

Hi Nige

Thanks for reply

Can you please explain
"However, the tax on any gains will be the rate applicable on the date of sale. "

Does thie mean that if the house has gone from say 500,000-600,000 in the period from date of death to sale the old rate will be used on 500,000(date of death valuation) and new rate applicable on date of sale will be used in amount property revalued ie 100,000

Thanks again
Noel

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[Padraigb]

To add to Nige's post:
- The amount of CAT payable on your inheritance is already decided. It is based on a valuation of its value at date of death; if the bulk of the inheritance is the property, the liability should be nil.
- If it is sold at a later date for a greater amount, there may be a CGT liability, calculated over the period from date of death to date of sale (which is the period of your beneficial interest).

I cannot envisage any scenario where a gain in property values might be wiped out by tax changes.

Whether you are wise to make plans based on a hope of property values rising in the short-to-medium term is another question, and I think you should give it some thought.