Inheritance of father’s home will not create tax charge

House valuation of €140,000 is well below inheritance tax threshold

“Everyone is allowed a principal private residence so I would expect that Revenue would be happy that, for the brief period you owned it, this was your family’s principal private residence.”

“Everyone is allowed a principal private residence so I would expect that Revenue would be happy that, for the brief period you owned it, this was your family’s principal private residence.”

 

My wife and I had sold our home in May 2016 and, since then, have been living with my wife’s aunt.

My dad died in February 2017. In his will, he left me the house. My sister, the only other sibling, got what remained in bank accounts. I sold my father’s house in August 2018. Am I liable for CAT by end of this year on sale of the property? It sold for €180,000 and was valued at the time of death €140,000.

Mr R.S., email.

The one thing you don’t mention is whether you previously received any inheritance from your mother.

On the basis of the information you have provided, there would not be any liability to CAT (capital acquisition tax or inheritance tax). As a son, in February 2017 when your father died, you were entitled to receive an inheritance of up to €310,000 before having to look at tax.

At a valuation of €140,000, your inheritance is clearly below this figure.

So, unless you previously received an inheritance from your mother or large gifts (above €3,000 a year) from either parent to the extent that this €140,000 property brought you above the €310,000 threshold, you have nothing to worry about on CAT.

The only other issue then is CGT – capital gains tax. This is payable on any gains made on assets sold. However, there is an important exemption of the sale of a principal private residence – or family home in more common parlance.

It is not clear whether you actually lived in your father’s house as a main residence between the time you inherited it in 2017 and the time it was sold less than 18 months later. I’m guessing not.

However, you own no other property. Everyone is allowed a principal private residence so I would expect that Revenue would be happy that, for the brief period you owned it, this was your family’s principal private residence.

The one issue could be if you are getting welfare payments or other credit by virtue of living with your wife’s aunt but I still think you’d be okay.

In other circumstances where this was deemed a second, or investment, property, you’d be looking at CGT of 33 per cent on €38,730 of the gain in price there is a CGT exemption on the first €1,270 of a gain on assets sold in any year, which reduces the €40,000 headline gain on this property.

Please send your queries to Dominic Coyle, Q&A, The Irish Times, 24-28 Tara Street, Dublin 2, or email dcoyle@irishtimes.com. This column is a reader service and is not intended to replace professional advice

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