Tax status of inheriting your home

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john luc

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I have a situation of an Uncle of mine who has had 2 children pass away recently. He has always lived with one of them and neither of these children had spouses or children of their own. When the first one passed away they had made no will so my Uncle as their sole parent inherited their house. The Uncle did not use the house and has kept it locked up.
The second child whom the Uncle has always lived with has passed away and left the house they own to my uncle believing that no tax would apply as it their home all their life,however, because my uncle still owns the first house he is being told he will have to pay tax on the house he has always lived in. The probate is not complete yet so could he dispose of the first house now as he never intended to do anything with it and only delayed disposing of it for sentimental reasons
 
I wonder could it not apply to the second, I only breezed over it but didn't see anything saying one child only. I'm sure the tax pros will be along shortly!
 
Unfortunately, as others have suggested, he is caught. If he didn't own the other unoccupied property, the relief would have applied to the inheritance of the second property. One of the main conditions is that the recipient does not have an interest in another dwelling. The relief couldn't have applied to the first inheritance either unless your uncle was living there. How much tax is involved?

When someone inherits a property that they're living in, the "valuation date" is the date of death. The only possible solution I can think of is the uncle disclaiming the inheritance, but that would only work if the "next" next of kin was living in the property. I think that the tax is unavoidable here unfortunately.
 
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This is what I was afraid of. If he had sold the first property before the death of the second child then he would not have any property in his possession at the time of death of the second child.
 
Would there be any point of trying to make a plea to the revenue on this as he did plan to dispose of the first property but unfortunately time caught up with him on the second death.
 
If s.79 applied on the death of his first child, then wouldn't he have his entire threshold A left, assuming he hadn't any prior gifts or inheritances in that threshold since 1991? What are the values of the houses/
 
Section 79 might help alright, although I haven't looked at it in a while. I think that it covers a situation where a child inherits something, dies, and that something passes back to the parent, and also the applicability of the Group A threshold to child to parent inheritances.
 
The first child died having no will so all the assets which was only a house passed back to my Uncle,the only parent of the first child. the second child made a will in which he put other beneficiaries in it and left only the house to his father. The belief was that as he has lived there with him all his life then no tax issues would apply. It is my understanding that while CAT A applied to the first child's estate only CAT B apply's now to the house being left to my Uncle.
 
john luc said:
I think this applied to the inheritance on the first child.
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S.79 applies if your uncle had made a gift to his first child ( which was not exempt) in the five years before that child died. Then anything he inherited from that child was completely exempt. So it would not have used up the threshold.

Regardless of s.79, Schedule 2 of CATCA states that where a parent takes an inheritance ( which is not a limited interest) on the death of their child, then threshold A will apply.

So either way, he should have the benefit of threshold A. What you have to find out is whether that threshold has already been used up by the first inheritance or whether that was exempt either through s.79, or dwellinghouse relief- though it sounds as though dwellinghouse relief was not applicable on the first death?
 
The Uncle had paid for a new wheelchair vehicle costing €30,000. This has now being sold and the proceeds have being given to my Uncle as the solicitor said it would only be sitting in their client a/c while the probate continues. The vehicle was registered in the child's name to avail of wheelchair benefits.The house was also part of a farm which was owned at one time by the Uncle but passed to the child.
 
Few different issues cropping up, best for your uncle to seek tax advice now before the probate issues.
 
Reading section 79 CAT it would appear that if the entire inheritance from the second child was being received by my Uncle then no tax would apply but as he is only receiving a portion of the inheritance I. E. The house, he is being forced to pay tax. I am going to inquire if he can get any relief from this section as this case is a bit harsh given that he has cared for the child as the child was wheelchair bound for years.
 
It strikes me that your Uncle has been advised in relation to the first inheritance and the use of S79.

Is this advisor now suggesting that S79 does not apply or are you reading up on it yourself in absence of proper advice.

I think that you might be confusing an absolute interest with inheriting an entire inheritance. Are you privy to the professional advice your Uncle is receiving.
 
This is myself trying to get a hold of the possible choices.
As the first child left 100% to the uncle, section 79 applied and so CAT A applied. A balance of this allowance is still available but not enough to cover the value of the home. I was hoping that as the uncle had given €30,000 as a gift to buy a wheelchair vehicle, this would have allowed him to receive the home without a tax charge
 
For the record on this matter,I have being in contact with revenue and they have clarified this.
Revenue states that the two children passing are two separate events. In the first child's death CAT A applied under section 79 as the parent was the total inheritor.
In the death of the second child were only a portion of his estate,his house, is being inherited,section 79 will apply to levee no tax because the parent gave this child a gift of €30,000.
 
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