House inheritance and CGT on gain

D

Decision Tree

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Hi All

My wife and two siblings have inherited their mothers house, divided equally between the three of them, and the sale has been finalised. Solicitor has advised that there may be a CGT liability, due to the sale price achieved being higher than the estimated value provided by an estate agent at the start of probate. From reading the CGT guidance from Revenue, I came up with this, using round numbers :

Sale price - 330K
Original valuation 300K
Solicitors Fees / other costs 6K

One third share of the net gain gives a liability of (330 - 300 - 6) /3 = 8K

CGT due = (8000 - 1270) * 0.33 = 2221

This is payable by Dec 15th, and we can also record it on next years Form 11 return.

Does the above seem correct ?
 
I think the relevant tax here is capital acquisitions tax (CAT), not CGT.

Children can receive up to €335k in lifetime gifts and inheritance from a parent without incurring a CAT liability. They are obviously all well below this with a €330k inheritance split 3 ways.

I don't know what the procedures are (if any) for reporting the difference between sale value and the probate value to Revenue. But I can't see any CGT liability.
 
Hi DT

There is a Key Post on the topic here:

Key Post - Capital Gains Tax & Estates & Capital Acquisitions Tax

This has come up in a few threads and I will try to give my take on it. Death, as a general rule does not give rise to a Capital Gains Tax Event. The Executor/Administrator acquire the assets at the market value at the date of death. In general the executor will apply for a grant of probate...
www.askaboutmoney.com
 
No, it's CGT - the tax on the increased value i.e the gain.

The figures look about right - so long as the property was vested in the three names.

If not, it will still be in the deceased's name and the estate has no annual exemption.

mf
 
Yes, she is well below the CAT threshold, it's the CGT on the gain portion that is uncertain for me.

Thanks for the input, and with that together with what I see on the thread linked by Brendan, I think there are some dependencies with how the solicitor executed the probate and sale. We'll seek some clarity from him, but now we have some idea of the questions to ask.
 
I'm pretty sure as an Estate, you are not entitled to claim the €1,270 annual allowance. It's also the executor that makes the CGT return on behalf of the estate and all estate returns need to be made online
 
I don't really get this.

OP made a good-faith declaration that turned out to be an undervaluation, so has a CGT liability.
But if the siblings had made a bad-faith declaration (say valuing it way over at €400k) there would be no CGT liability?

Is this right?
 
If it was over-valued at probate (say € 400k) and subsequently sold for € 330k then, in theory, there would be no CGT due by the estate.

However as the amount now distributed by the estate (330) is now less than the probate value (400) Revenue might be asking questions as all of the CAT returns will have to be revised and amended from the original (400/3) to the revised value (330/3)
 
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