Property dive and taxman slash value of inheritances

[BoyRacer]

Property dive and taxman slash value of inheritances - → independent.ie/business/pers … 79200.html

“If there are borrowings outstanding on a property, the effect of those borrowings – combined with the drop in property values – could be anything up to 100 per cent on the inheritance,” says Gaffney.

Many of the inheritances pocketed today are between 40 per cent and 60 per cent lower than those received during the boom years, according to Oonagh Casey, tax partner with the Dublin tax adviser, Fagan & Partners. “People who invested in property or bank shares are nursing heavier losses,” says Casey.

The taxman too is getting a bigger chunk of people’s inheritances. The amount you can inherit tax-free is now less than half of what it stood at almost five years ago. In early 2009, you could have inherited €542,544 from a parent tax-free. This has since fallen to €225,000. Furthermore, capital acquisitions tax (CAT – the tax you pay on an inheritance) has also soared. In 2008, the CAT rate was 20 per cent – it is now 33 per cent.

Another hangover of the economic squeeze is the propensity of parents to help out their children financially.

This has not only chipped away at the ultimate value of inheritances, it has also increased the danger of an inheritance ending up in the hands of a bank or creditor. This is particularly true if a child’s borrowings are on a full recourse basis – where a bank or creditor is entitled to chase a borrower’s assets.

“Many parents, who are otherwise financially secure, have transferred assets or funds to children by way of an advance on their inheritance, in circumstances where their children are themselves in financial difficulty,” says Cormac Brennan, at Dublin law firm, O’Connell Brennan Solicitors.

there is more

[Tis_Meself]

The old hill farmers where I grew up maintained family order by keeping the will in one pocket and a fountain pen in the other for punitive codicils. - they also tended to outlive at least one child out of pure spite and there was always the fear of how much they’d leave to the parish!

[Terra_Incognita]

The other thing they tend to do is they call the oldest the same name. This means there is no messy inheritance to deal with.

A solicitor friend of mine was dealing with a sale in Galway when it transpired that the property had passed through 4 generations of lets call him “John Bull” all 4 generations had the name “john Bull” at each death the property transferred to “John Bull” but no messy probate or revenue needed to be dealt with.

The deeds where in “John Bulls” name, you get where this is going. No inheritance tax was ever paid at any point nor were the assets ever formally transferred at any point.

If “John Bull” ever needed to prove ownership he just produced a passport, two utility bills and the deeds. job done.

[slasher]

“John Bull”?

Must have been a blow-in!

[Tis_Meself]

@slasher

“John Bull”?

Must have been a blow-in!

I’d only worry if it was found to be transferred to Thomas Byrne!

[TheJackal]

Bit of a lazy article. Nothing new in it.

We all know property prices are down, as are the CAT/CGT thresholds. We also know CAT/CGT rose to 33%.

[jake76]

It should have a effect on the market, especially the trader ups. I would expect.

Inheritance is the most likely way to come into a lump sum.

[CdeB]

@Terra Incognita

If “John Bull” ever needed to prove ownership he just produced a passport, two utility bills and the deeds. job done.

Would the deeds not be signed/dated before John Bull was born?

[jake76]

@CdeB

@Terra Incognita

If “John Bull” ever needed to prove ownership he just produced a passport, two utility bills and the deeds. job done.

Would the deeds not be signed/dated before John Bull was born?

I suspect that this worked in the past. I doubt John Bull the fifth will be able to pull the same trick though

[slasher]

@CdeB

@Terra Incognita

If “John Bull” ever needed to prove ownership he just produced a passport, two utility bills and the deeds. job done.

Would the deeds not be signed/dated before John Bull was born?

it only matters if you’re selling/moving. Just like negative equity!

[grumpy]

@TheJackal

Bit of a lazy article. Nothing new in it.

We all know property prices are down, as are the CAT/CGT thresholds. We also know CAT/CGT rose to 33%.

Ah come on. The conclusion that because the value of the property you inherit going down in value means the value of your inheritance is reduced is complex and susceptible to significant error. I’m glad that the Independent weighed in to put to rest this mind bending conundrum for me. I am now a committed subscriber for life.

[ex-Patrick]

@grumpy

Ah come on. The conclusion that because the value of the property you inherit going down in value means the value of your inheritance is reduced is complex and susceptible to significant error. I’m glad that the Independent weighed in to put to rest this mind bending conundrum for me.

Saved me the bother of bumping off at least one elderly relative.

[Tis_Meself]

@ex-Patrick

@grumpy

Ah come on. The conclusion that because the value of the property you inherit going down in value means the value of your inheritance is reduced is complex and susceptible to significant error. I’m glad that the Independent weighed in to put to rest this mind bending conundrum for me.

Saved me the bother of bumping off at least one elderly relative.

Patience … Patience!
All things come to those who wait … where there’s a will there must be willingness!

I intend to make a video will meself:
It shall begin with a scene-setting panning shot.
"Hello everybody, you may wonder why I am standing here talking to you from outside the ISPCA Dog Shelter … "

[yoganmahew]

Value of inheritance down between 40 and 60% (or let’s call it 50% for simplicity). Tax free amount down 50% (no need for simplicity there…

Now, “The taxman too is getting a bigger chunk of people’s inheritances.” appears to be bullshit, no?

By the way, what was the inheritance tax free amount in our reference year of, say, 2001?

[TheJackal]

@yoganmahew

Value of inheritance down between 40 and 60% (or let’s call it 50% for simplicity). Tax free amount down 50% (no need for simplicity there…

Now, “The taxman too is getting a bigger chunk of people’s inheritances.” appears to be bullshit, no?

By the way, what was the inheritance tax free amount in our reference year of, say, 2001?

Agreed.

Thresholds
revenue.ie/en/tax/cat/thresholds.html

Edit: Thresholds are currently very close to how they were in 1995

[shweeney]

I assume the “Fair Deal” is having an impact here as well.

[newirishman]

@TheJackal

@yoganmahew

Value of inheritance down between 40 and 60% (or let’s call it 50% for simplicity). Tax free amount down 50% (no need for simplicity there…

Now, “The taxman too is getting a bigger chunk of people’s inheritances.” appears to be bullshit, no?

By the way, what was the inheritance tax free amount in our reference year of, say, 2001?

Agreed.

Thresholds
revenue.ie/en/tax/cat/thresholds.html

Edit: Thresholds are currently very close to how they were in 1995

The spouse is not mentioned in those thresholds?
Am I missing something?

[Madness_of_Crowds]

@newirishman

@TheJackal

@yoganmahew

Value of inheritance down between 40 and 60% (or let’s call it 50% for simplicity). Tax free amount down 50% (no need for simplicity there…

Now, “The taxman too is getting a bigger chunk of people’s inheritances.” appears to be bullshit, no?

By the way, what was the inheritance tax free amount in our reference year of, say, 2001?

Agreed.

Thresholds
revenue.ie/en/tax/cat/thresholds.html

Edit: Thresholds are currently very close to how they were in 1995

The spouse is not mentioned in those thresholds?
Am I missing something?

Spouses are threshold-exempt, a fact that businesspeople facing impending bankruptcy can find very useful.

[slasher]

@newirishman

The spouse is not mentioned in those thresholds?
Am I missing something?

revenue.ie/en/personal/circu … e-tax.html

Surviving Spouse or Surviving Civil Partners
If you are a surviving spouse OR surviving civil partners taking an inheritance from your deceased spouse or civil partner, the inheritance is completely exempt and, no matter how valuable, will not be liable to Inheritance Tax.

[newirishman]

Thanks Guys! Good to know.