Disclaiming part of the residue

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Keebo2024

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Hi All,

Myself and my 4 siblings have been left the 'rest residue' of my fathers estate. There is the family home (330k) and a sum of cash (300k). My siblings have no interest in the house and want me to have it. I suggested they disclaim the house and I will disclaim the cash. The solicitor said that both the house and the cash form the residue and this can not be partially disclaimed.

My accountant said that the estate needs to be itemised for the grant of probate and should allow us to disclaim on the itemised parts of the estate. I'm not sure he is right.

Does anyone know how I can go about keeping the house in the most tax-efficient manner? Is a deed of family arrangement the only way? I think I get caught for the stamp duty if we use the deed of family arrangement.

Anything else that I am missing?

Thanks
 
So it's €630k - you get €126k each.
They gift you €50k each.
You would have a CGT bill of 33% of €170k or €56k so that is not a good idea.

Brendan
 
O'Hanlon Tax has an article on the topic here.

http://www.ohanlontax.ie/downloads/DisclaimersandDeedsofFamilyArrangements.pdf

(The document is described as unsecure so download it at your own risk.)

As they are specialists, it might be worth getting their opinion on it, as your solicitor and accountant seem to disagree.

I am not a lawyer or tax expert, but from reading this document, it appears that they can disclaim the house but it will be regarded as a gift from your siblings to you reduced by the cash they get in exchange, so my example above is correct, I think.

Brendan
 
Brendan Burgess said:
O'Hanlon Tax has an article on the topic here.


(The document is described as unsecure so download it at your own risk.)

As they are specialists, it might be worth getting their opinion on it, as your solicitor and accountant seem to disagree.

I am not a lawyer or tax expert, but from reading this document, it appears that they can disclaim the house but it will be regarded as a gift from your siblings to you reduced by the cash they get in exchange, so my example above is correct, I think.

Brendan
Click to expand...
Hi Brendan,

Thanks for the reply, my take on it is that their share of the house is 66k each. Their share of the cash is 60.

If I give them my share of the cash, 15k each and I also give them 19k each from my own personal funds, I would be buying their shares for 34k each. This means they are gifting me 32k, this falls under the tax free gift allowance. I would then have to pay the 1% stamp duty on the €240k (4/5 shares of the house).

*I am not 100% sure if I can add my own external funds ( the 19k) into the deed of arrangement....?

professionaltaxadvisers.ie/deed-of-family-arrangement-disclaimer/

Keebo
 
The €32,500 Group B allowance is a lifetime allowance for all gifts and inheritances from that Group.

It is not per individual.

So once one person gifts you €32,500, then any other gift or inheritance from that gift is taxable at 33%.

Brendan
 
If you pay them €19k each...

So it's €630k - you get €126k each.
They gift you €50k each less €19k which is say €30k each
You would have a CGT bill of 33% of €120k (4 x 30) or €40k.
 
:(

How does this logic sound?

To simplify things, I'm saying the house is 300k, plus the cash is 300k.

Each of the 4 has a 60k share in the house.

I add 60k to my share of the 300k cash in the will and divide that 120k between the four others as their share of the house price we agreed upon. (Gifting them €30k I assume)

Once that is done, it looks like they are gifting me 120k. Can €44,500 (tax-free gift @32500 + €3k x 4 tax-free small cash gifts) of that 120k gift be considered tax-free? Leaving me with a tax bill of €24,915.

Not sure how gifting both ways would work :confused:

Thanks,
 
Keebo2024 said:
My siblings have no interest in the house and want me to have it. I suggested they disclaim the house and I will disclaim the cash.
Click to expand...
Keebo2024 said:
To simplify things, I'm saying the house is 300k, plus the cash is 300k.
Click to expand...

Are you sure that all siblings are in agreement? If someone said to me that they have no interest in the house, I would assume that they still want their share of the inheritance i.e €120k
 
Keebo2024 said:
To simplify things, I'm saying the house is 300k, plus the cash is 300k.

Each of the 4 has a 60k share in the house.
Click to expand...

I think that you are complicating things with your double gifting.

You have an estate worth €600k - so each is entitled to €120k.

If they agree that you are to receive €300k instead of €120k, then you are getting a gift of €180k from your siblings.

I assume that the €3k small gift exemption applies to these implied gifts but that is not material.

If you buy the €300k house from the Executor for €200k ( Your €120k + €80k of your own cash ) you are getting a gift of €100k.

Brendan
 
_OkGo_ said:
Are you sure that all siblings are in agreement? If someone said to me that they have no interest in the house, I would assume that they still want their share of the inheritance i.e €120k
Click to expand...
Yes, they are in full agreement. They would like to see the property remaining in the family and understand that the house will need to be more or less knocked (a number of builders have stated this). If I have to pay a lot of GCT tax, it becomes a very expensive site.
 
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