Q. About 20 years ago, I took a gift of property from my father. My mother passed away a few years after that, and I received a small inheritance from her. I paid tax on both of these transactions. Dad is still alive, and intends to gift a premises (from which I operate a business) to me. I do not pay any rent on that. Although he is still hale and harty, I know that I am to be left the balance of his property, which can be sizable. I know I may well have a tax bill – can you advise me on my next steps?
Dear Reader,
Firstly, the precise advice available to you would well depend on the dates on which you took your inheritances, the amounts thereof, and various other factors.
Obviously, you have paid CAT for the prior gifts. This suggests that you may have used the entire of your Tax Free Threshold, at least as it applied at the time. Those thresholds may well have expanded since then, and currently lie at €400,000 for gifts. Again, it would be important that you have your facts and figures to hand.
- External Walls: Up to €8,000 Grant
- Attic: Up to €1,500 Grant
- Cavity Walls: Up to €1,700 Grant
- Internal Dry Lining: Up to €4,500 Grant
A gift given while alive is subject to a Small Gift Exemption of €3,000. However, you should also note that the use of property rent free is also classed as a gift for CAT purposes. If the annual value of the market rate of rent for the premises exceeds €3,000, you might be liable to pay CAT on such excess. You might be liable not only for this year, but for previous years you had the use of the property without rent.
Naturally, if you take the transfer of a business premises, you may well have to pay CAT depending on whether or not you have any unused Tax Free Threshold.
Your father should also consider whether he has any Captial Gains Tax liability on the transfer of the business premises. CAT you pay can be offset against CGT he pays, but naturally it would be important for you to make full enquries in this regard.
It is important to note that the date for CAT filing is the end of October, which can be extended shortly into November if you/your accountant file online.
As regards trying to plan against future CAT, there are life policies known as ‘Section 72 Policies’, which your father can take out
When it comes to anything to do with tax, ideally you should speak to your tax advisor or accountant.