Do I have to pay the property tax on the home of my dead parents?
Revenue says that the liable person for property tax on the home of a dead relative is the executor or administrator of their estate
I am trying to find out what I need to do in relation to local property tax for my parents’ home. They both died recently and I have been left in charge of organising their affairs.
I am not sure whether we need to do anything about this.
As far as I know, they were paying the tax by direct debit. It is not a major thing but I am concerned that I do not get into trouble with the Revenue over this. Is any tax due now on their home? Who has to pay it?
Ms P.McG., Laois
Taxes unfortunately do not pass with us and, therefore, as you grapple with your parents’ estate, you should be aware that their home is still liable for the local property tax.
In the circumstances, Revenue assures me that the liable person is yourself as executor or administrator of the estate.
Your liability includes both any tax falling due following your parents’ death until the time as probate is granted and the estate is passed on to any beneficiaries – and to any tax that was already outstanding at the time your parents died.
All of this can be quite intimidating, not to say expensive.
Managing the probate process can be daunting, especially for those without legal training, and many people are not in a position to bear an additional cost burden while doing so – even for sums as relatively minor in the context of the assets of most estates as local property tax.
The good news is that you can apply for a deferral of any local property tax due. The deferral can cover both any outstanding LPT due and any property tax that arises during the period of securing probate before disbursing assets to your parents’ beneficiaries. You don’t say whether their home is their only property but it is worth noting that the deferral is not limited only to owner occupiers.
So that’s the good news. Of course, deferral is just that – the tax doesn’t go away. In fact, you pay a slight premium for the privilege of availing of it.
The maximum period of deferral is three years – which should be more than ample for any estate unless legal complications arise – and that period is deemed to kick in on the date of death, not necessarily when you specifically apply for it.
Of course, if the property is transferred to a beneficiary within that three-year period, the period of deferral ends. The same is true if the property is sold within the three-year period.
As for the premium, Revenue imposes an “interest charge” of 4 per cent per annum on any amount of local property tax subject to deferral.
In relation to the mechanics of repayment, Revenue says any deferred local property tax, including interest, must be paid to Revenue before the sale of the property is concluded or before it is transferred to the ownership of a beneficiary.
A relevant consideration in all of this is the “liability date” – which is November 1st of the previous year. If you transfer or sell the property after that date in a year, you are responsible for paying the local property tax for the following year before it is sold or otherwise handed over to new ownership. If the change of ownership takes place before that date, liability for the following year’s local property tax falls on to the new owner.
Inheritance and small
Thanks for the many great articles on inheritance tax and particularly on how to gift money to children and grandchildren without incurring inheritance tax. I have two questions:
1. I understand the annual allowance for gifting money to children is €3,000/annum and I am wondering if this reduces the inheritance limit of €225,000 or if it is in addition to the €225,000 allowance?
2. Is it possible to gift the €3,000/annum for previous years, for example is it possible to gift €3,000/annum for the years 2010 to 2013?
Mr J.O’R., email
The annual “small gift exemption” of €3,000 is an exemption from the standard method of assessing liability to capital acquisitions tax and therefore does not affect the threshold.
The exemption is not limited solely to children but where it is used in that context, it will not impact the Category A threshold governing tax liability on gifts and inheritances between parents and children up to a current aggregate amount of €225,000. To qualify, the gift must be given in the current year. It cannot be backdated or allocated to previous tax years, so you cannot this year give a child, say, €12,000 and deem that it is split equally between 2011, 2012, 2013 and this year.
The practice you are referring to is essentially the window for availing of tax relief due on, for instance, medical charges incurred in a previous year. This does not apply for the small gift exemption.
Send your queries to Dominic Coyle, Q&A, The Irish Times, 24-28 Tara Street, Dublin 2, or email firstname.lastname@example.org. This column is a reader service and is not intended to replace professional advice.