Brendan Burgess
Founder
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Hi Brendan. If the beneficiary inherits the net proceeds of sale then surely CAT is based on the cash value of the inheritance. It matters not what the property value was along the way..?CAT calculation
The valuation date for the CAT liability is the date of the Grant of Probate as the nephew was not living in the house.
The date for the CAT threshold is the date of death : 1 January 2017 for Group B was €32,500
Valuation at date of probate : €262,500
Group B threshold: €32,500 (The nephew has received no other gifts in this Group)
Taxable: €230,000
CAT payable : €75,900 (33% of €230,000)
How to pay it
The CAT year runs from 1 September to 31 August
The CAT must be paid and filed by the following 31 October
The Grant of Probate was 1 January 2018
So the beneficiary must pay it and file a return by 31 October 2018 - even if the property has not been sold!
Note: The small gift exemption of €3,000 does not apply to inheritances.
IMO - CorrectAlternative approach to CGT
The Executor can transfer the property over to the nephew.
For CGT purposes, the nephew is deemed to have acquired it at the value at the date of death of €232,500
When he subsequently sells it, he will pay CGT on the difference between the sales proceeds and €232,500. (?)
If the nephew lives in the house it will become his PPR and so there will not be a CGT liability when he sells it.
Thanks for the reply, sorry was really thick mixing up CGT and CAT.You are confounding CAT and CGT - they are two completely separate taxes
CAT: Capital Acquisition Tax - paid on gifts and inheritances based on the value on date of acquisition/valuation
CGT: Capital Gains Tax - paid on any gain made by the disposal of an asset, any losses can be carried forward to offset future Capital Gains
CAT is calculated on the cumulative value of the inheritance/gift and is taxed using the threshold at the time of the inheritance/gift
I think the tax due is calculated as follows - but I could be wrong:-
First inheritance: value 310K, Threshold 200K - tax paid on 310-200=110 @ 33% = 36.3K
Second inheritance: value 320K - cumulative inheritance 320+310=630K Threshold 400k tax due on 630-400=230 @ 33% = 75.9k less tax already paid 36.3k so tax now due 75.9-36.3=39.6
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