Is this not semantics? The executors/beneficiaries are responsible for both CGT and CAT.The uplift in the value of the house is a problem for the estate not the beneficiaries of the estate.
I decided not to deal with CAT now as I had indicated I would in my original post but to pay the CGT first (as I realised late in the day that it was due on 15th Dec whereas the CAT wasn't due until end Oct next year). The value of the house at date of Probate is significantly more than the value I put on the CA24 (date of death value) and so this brings us over the CAT threshold. However, the CGT paid will reduce each beneficiaries CAT. Still, the total of CGT + CAT is a painful amount and could have been reduced if the date of death value the EA had put on the house had been higher. It was months into the process before I had a good feel for the property market and could clearly see that the EA's valuation was well below what it should/could have been but I didn't understand at the time the implications of that for tax. My advice to anyone in a similar situation is to get a feel for the market before you get an Estate Agent to do a date of death valuation. It's possible that some EA's give a low valuation to make themselves look good when the house is sold.I dealt with a will that had 1 beneficiary and the total value of the estate was covered by the CAT A allowance so no CAT was due however the house rose in value and so the estate had to first pay CGT on the increase of the house that was part of the inheritance
I don't mind what it's called if the meaning is the same. The Estate paid the CGT but it's each beneficiary is responsible for paying their own CAT. However, I assume they each can deduct their 1/3 share of CGT paid from their CAT liability?I think you could be confusing same event relief with CGT being offset against CAT.
As above - I do understand that.The estate is responsible for the CGT. The beneficiaries are responsible for CAT on the funds that they receive.
I wouldn't go down that road as it's a subjective area and I'm not really that bothered by it. Just want to make people aware, in the current market, to be more informed and involved when they are getting their date of death valuation.If you think that the auctioneer valuation was incorrect then you have the option to make a claim against them as you paid for a professional service and you did not get a proper service.
Are you saying here that the annual rate of increase is 10% ? What do the number of beneficiaries have to do with it? - or am I misunderstanding the point you're trying to make?If there are 3 beneficiaries the house may be worth more than €1m a rise of €150k is 18 months would be about right!
I don't mind what it's called if the meaning is the same. The Estate paid the CGT but it's each beneficiary is responsible for paying their own CAT. However, I assume they each can deduct their 1/3 share of CGT paid from their CAT liability?
As above - I do understand that.
I wouldn't go down that road as it's a subjective area and I'm not really that bothered by it. Just want to make people aware, in the current market, to be more informed and involved when they are getting their date of death valuation.
Are you saying here that the annual rate of increase is 10% ? What do the number of beneficiaries have to do with it? - or am I misunderstanding the point you're trying to make?
Having disposed of the property and paid its CGT liability, the estate then has money in it.
It's this money that is distributed to the beneficiaries, and their CAT liability arises on the receipt by them of a benefit in the form of money.
Thanks for that PMU - I agree fully. BTW would you have a look at a thread I started called Liable for CAT means not liable for CGT where the gain is due................. especially at my last post in it - I'd like you're views on it please.
All done. The only allowable costs I deducted were those directly related to the sale of the house (EA + Solr fees).You have to separate out your role as an executor and as a beneficiary. The CGT is paid by the estate as it is disposing of a chargeable asset, and is calculated on difference between the value of the asset at the date of death and the value at disposal, less allowable costs. As the executor you pay this tax from the proceeds of the estate. Then as an executor you distribute the remaining proceeds of the estate to the beneficiaries, as provided for in the will.
I have informed the other beneficiaries that it's their responsibility to pay their CAT. However, I believe that each of us are entitled to claim a credit against CAT for the CGT paid. This Revenue page appears to back this up. https://www.revenue.ie/en/gains-gif...nst-cat/credit-for-capital-gains-tax-cgt.aspxNow the beneficiaries must calculate the amount of CAT to be paid. If the inheritance plus the value of gifts already received exceeds the relevant group lifetime threshold the beneficiary must pay CAT. The fact that the estate paid GCT on the increase in value of the house is irrelevant and the beneficiary need even not be aware of this. The beneficiary didn't pay it and in any event it's not an allowable deduction.
The reality is it's no different than if my dad, who is alive, sold an investment property tomorrow - resulting in a CGT liability for him - and then gave me the proceeds. That's not double taxation on the same event.
There seems to be different views among the people who have contributed to this thread. jpd's view quoted above concurs with my interpretation of what's on the Revenue website. I'll wait for Revenue to contact each of us about CAT before sending in any return. Thanks for all the posts - much appreciated.The beneficiaries have a CAT liability but they can offset the CGT paid against that
There seems to be different views among the people who have contributed to this thread. jpd's view quoted above concurs with my interpretation of what's on the Revenue website. I'll wait for Revenue to contact each of us about CAT before sending in any return. Thanks for all the posts - much appreciated.
Ok thanks - I'll go with that as the correct interpretation. I was reading the Revenue website (excerpt shown below) and interpreting it differently (and obviously mistakenly). I now trust that you're view is, that the property giving rise to the CGT and CAT is the same property but not the same event. I'll submit a CA26 and try to reduce the CAT liability that way (e.g. value of furniture, car, jewellery, crystal etc).There is a relief from CAT for CGT paid arising on the same event. In this case there are 2 events. No amount of wishful thinking (or wishful interpretation) on your part alters that fact.
Ok thanks - I'll go with that as the correct interpretation. I was reading the Revenue website (excerpt shown below) and interpreting it differently (and obviously mistakenly). I now trust that you're view is, that the property giving rise to the CGT and CAT is the same property but not the same event. I'll submit a CA26 and try to reduce the CAT liability that way (e.g. value of furniture, car, jewellery, crystal etc).
Credit for Capital Gains Tax (CGT)
If CGT and CAT are due on the same event and on the same property you may be entitled to a tax credit. This can happen when:
Thanks for sticking with this thread. There's confusion out there about CGT & CAT and I think this thread will help.
- You receive gifts of property, stocks or shares
- A property is appointed from a will or settlement
If a gift is given within 2 years prior to the death then it's considered an inheritance - I read this on the Revenue site - although it has no relevance in our case, but it might for others out there.From the excerpt you have quoted, bullet point 1 cannot apply as this isn't a gift (and in any event it would be a gift of money, not a property).
The will didn't direct that the property be sold. However, I understand that there is some Revenue benefit if the Will stipulates that the house is to be sold but I'm not sure what that benefit is.Bullet point 2 also doesn't apply, as there is no appointment of the property under the will; the will directs that the property be sold.
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