Tax Implications for Inherited Family Home with Right of Residence
What tax are we liable for on home we inherited where our mother had a ‘right of residence’?
The Irish Times
Image: The Irish Times
After inheriting a family home in Ireland, the three brothers need clarity on tax liabilities following their mother's death. The property was valued at €1 million at her passing, but potential development could increase its worth to €1.5 million, affecting inheritance tax thresholds and capital gains tax.
- 01The family home was valued at €1 million at the time of the mother's death, impacting tax calculations.
- 02The right of residence held by the mother reduces the taxable inheritance value for the brothers.
- 03Capital gains tax will apply on the increase in property value from the mother's death to the sale date.
- 04Each brother could face a capital gains tax liability of €39,181 if sold for €1.5 million after expenses.
- 05The handwritten will raises concerns about legal validity and potential claims against the estate.
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The article discusses the tax implications faced by four brothers who inherited a family home in Ireland after their mother's death. Their father’s will allowed their mother to live in the house until her death, which occurred six years ago. The home was valued at €1 million at that time, but potential development could raise its value to €1.5 million. The brothers are uncertain about inheritance tax liabilities and capital gains tax (CGT) due to the increased property valuation. Each brother's inheritance tax liability was calculated based on the property’s value minus the right of residence held by their mother. They may owe CGT on any gain from the sale of the property, with one brother potentially exempt due to dwelling house relief. The article also highlights concerns regarding the handwritten will and its implications for legal rights and potential claims against the estate.
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The brothers must navigate complex tax implications due to the inheritance and potential sale of the property, affecting their financial situation.
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