Alex O’Neill Solicitors replies to one of the queries received at Lawlink@alexoneill.ie
Can I sell before a Will goes to Probate?
Q I recently inherited my late mother’s home under her will (my father having died 20 years ago).
My Financial circumstances are quite acute at the moment and I need to put the house up for sale immediately. The Estate Agent has valued the house at €250,000.00. Can I sell the house before the Will goes to Probate and when do I have to pay Inheritance and Probate Tax? Also will I have to pay tax on the €250,000.00 ?
A. Firstly, as your mother left a Will you can enter into contracts to sell the house now but you will not be in a position to finalise the sale until the Grant of Probate issues. Your solicitor will insert a clause in the Contract to this effect. You should also mention your circumstances to your Estate Agent as any prospective purchaser will need to be alerted to the fact that they will not have, at the time of entering into the Contract, an exact closing date as that will depend on the issue of the Grant of Probate.
The payment date for inheritance tax (Capital Acquisitions Tax or CAT) depends on when the valuation date falls. The “Valuation date” is a legal term and selecting a date can be complicated, so professional advice should be obtained. Revenue generally accept one of two dates: (i) the date of death (for a beneficiary in possession of the asset), or (ii) the date the Grant of Probate issues. If you are not living in the house, Revenue are likely to accept the date of Grant as the valuation date. This means that the amount of tax payable will be set according to the date on which the Grant of Probate issues.
Ordinarily inheritance tax must be paid when it falls due even if the house is not sold. If the valuation date is on or before August 31st, the inheritance tax is due by September 30th, 2011. However, the tax payment date is likely to move back to October 31st later this year to stay in line with income tax and CGT. The current rate of inheritance tax is 25% and the tax is based on the value of assets at the valuation date, not the sale price. So if the valuation of an asset at the valuation date is €250,000.00 and the asset only sells for €200,000.00 then inheritance tax will be payable on €250,000.00. Probate Tax was abolished for deaths occurring on or after December 6th, 2000 so you do not need to concern yourself with this.
As you are inheriting from your parent there are tax free allowances which apply and tax is only payable on the amount above the tax free allowance. In your case the current threshold for those inheriting from parents is €331,839.00. As your valuation is below this, and it is unlikely that you will sell for more than the valuation price, you would appear to be fully covered by this allowance and therefore no inheritance tax would be due. Incidentally you are also entitled to deduct a €3,000 small gift allowance from any inheritance.
An important point to note in relation to the tax exemptions is that you must take into account any inheritance you may have received from your father (ie inheritances in the same category A) as the exemption is a lifetime one, not an exemption per inheritance.
As probate and tax matters are complex, expert advise should always be sought in these matters.
Gemma Lyons is a Solicitor with Alex O’Neill Solicitors
If you have a legal query that you would like answered you can email lawlink@alexoneill.ie The column is a reader’s service and is not intended to replace professional advice. No individual correspondence will be entered into.
