Inheritance Tax - Budget Brings Little Comfort

Inheritance Tax (also known as Capital Acquisitions Tax or CAT) rates shot up and tax free thresholds fell radically in 2012.  Apart from slightly raising the Group A threshold (which applies mainly to gifts and inheritances from parents to children) the recent budget has done nothing to address the many difficulties which can commonly arise.



One of the major issues is that rising property values, especially in Dublin, have caused tax-free thresholds to be very quickly exceeded. Many families are unaware of the significant inheritance tax issues that can arise when parents or older loved ones die.

Inheriting siblings, nephews or nieces are among those most acutely affected. In their cases tax at 33% can be payable on that portion of the value of a property over €30,150. This has had the effect of catching large numbers of people in the tax net who never anticipated they would find themselves in such a situation.

Take the example of someone who inherits a property from an aunt, where a €30,150 threshold applies. The property is valued at €200,000. This will trigger a tax bill of around €56,000.

Even where property passes to children, smaller families with fewer people sharing in the inheritance, have meant the tax bill can be very significant.
Where the property in question is a residence it may be possible to set up structures to reduce or eliminate the tax.  Making lifetime gifts can also be used to cut down on Inheritance Tax.  While the Revenue have been clamping down on gifts parents make to children ( towards a deposit on a house or a cash wedding gift), it is still possible to gift up to €3,000 per annum to an individual without impacting on the CAT threshold.

For more information please email This email address is being protected from spambots. You need JavaScript enabled to view it.  or telephone Natasha Dunne at 6773434


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