What are the tax implications of being left a house by a deceased parent? How is the house valued and by whom? And is the tax self-assessed?
When through the same a few years ago . Here’s were I started.
You’ve a gift/inheritance threshold for the parent-child category of something like 450k. This is a lifetime threshold for all such relationships (i.e. if you already were left a house by another parent that consumed all of this allowance, it’d be taxable on the whole amount).
You need a professional valuation for the house. Try get a low one, especially if it’s likely to be worth more than 450k.
The house would be valued by the executors as part of the valuation of the estate for probate purposes. This should be fairly realistic. I have seen the valuations ofice dig their heels in when faced with an unduly low valuation. The tax is self assessment but is usually administered by the executors as their is some kind of secondary liability if the tax is not discharged by the taxpayer IIRC.
Have a look Revenue.ie. They have pretty good FAQs.
Have just been thru this. Inherited the family home last year.
In a nutshell:
You can inherit property/assets to a total value of the low 400’s and you have zero tax liability on them. That means that you can do whatever you want with what you inherit, and the tax liabilities are zero. Let’s just say for arguements sake that the ceiling is 415 Euros. As long as the home that you inheirit is worth less than that, you are grand. You owe nuttin’ to nobody.
As to who determines the valuations, the executor of the estate will have to have a professional evaluation of the house done to determine its value. You need this for a deed of Probate to be granted, which declares you to be the new owner of the home. This is also done to assess the tax liability on it. The folks at the Probate office are real sticklers on this. They will not accept a valuation unless it is done by a trained real estate professional, who has no vested interest in the case. They can smell bullshitters and low ballers from a mile away.
Lets say for arguments sake that the home is valued at 300,000. You will have no tax liability as you are under the 415,000 ceiling. However, if it is valued at 500,000 you will owe capital gains tax on the 85,000 that is the diff between the ceiling allowance and what it is worth. I do not know if you are assessed this tax the year that you inheirit it, or when you sell it. I think it is when you sell it. But either way, you gotta pony up.
If the house sells for the full 500,000 asking price, you will owe for the full 85,000. But if it sells for less than that, you will owe for whatever it sells for, above the 415,000 tax free ceiling. I think that the capital gains tax rate is 25% but I am not sure. You will not have to pay that tax on the entire purchase price, just the amount that is over the 415,000 tax free ceiling.
Hope that helps.
ETA: The 415,000 tax free ceiling covers ALL assets inheirited, not just a house. So if your folks left you cash, shares, stocks etc etc as well as the house, they all need to be factored into the equation. If the value of everything…the house, the land, the stocks, cash in the bank etc etc goes over the 415,000 tax free ceiling, then you will probably wind up owing something to the Revenue. If that is the case, I highly suggest getting in touch with an accountant (who specalizes in estate taxes) to help you figure it all out. I did. His fees ran to a couple of grand. It sucked at the time, but the security and peace of mind that he gave me, did not have a price tag.
dont suppose there’s any chance your inheritance is part of our attached to any’agricultural’ holding in which case you end up paying ony pennies in CAT