Dáil Éireann díospóireacht -
Wednesday, 25 Nov 1998

Vol. 497 No. 3

Written Answers - Inheritance Taxes.

Noel Ahern

Ceist:

119 Mr. N. Ahern asked the Minister for Finance the cost of inheritance tax, capital gains tax, probate or other tax due in respect of a house valued at £35,000 owned by a person who died in June 1994 and willed the house in equal shares to her three sons (details supplied) who intend to sell the house for £150,000; the amounts due by each brother; and if he will make a statement on the matter. [25129/98]

Minister for Finance (Mr. McCreevy):

I am informed by the Revenue Commissioners that based on the details supplied the position in relation to the various taxes is as set out below: On the basis that none of the three sons received any prior gifts or inheritances since 2 June 1992, each son would be entitled to avail of a tax free threshold of £174,000. On that basis no inheritance tax liability would arise.

Assuming no exemptions, probate tax at the rate of 2 per cent would be payable on the value of the net estate at the date of death, inclusive of the house. Where, in the year 1994, the house was occupied by the deceased as his/her principal private residence at the date of death it was entirely exempt if there was a surviving spouse. Where there was no surviving spouse that portion of the house passing to a dependent relative was exempt. It was necessary that the dependent relative normally resided in the house at the date of death; and had income not exceeding a specified amount £4,023 in 1994.

In regard to capital gains tax each son would be treated as having acquired his one-third interest in the property at the date of death of his mother in June 1994 for a consideration equal to £11,667 namely £35,000 x one-third. If the house is sold now for £150,000, each son would be liable for capital gains tax in respect of his one-third interest in the property.

	£
Proceeds	150,000
Expenses of sale, say,	4,000
	146,000
Deduct—
market value at time of acquisition £35,000 indexation multiplier, x 1.081 =	37,835
overall gain	108,165

Divided as to one-third to each son i.e. chargeable gain of £36,055 each.

Assuming none of the sons have any other gains, the first £1,000 is exempt from CGT.

The tax due in each case is £35,055 x 20 per cent i.e. £7,011.

If any of the sons occupied the property as their principal private residence during their ownership they may be entitled to relief from the tax payable. The 1994 valuation of the house would appear to require examination by the Revenue Commissioners in the light of a sale for £150,000 in 1998.