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Tax rates on Inheritenace

When administering an estate, probate tax, capital acquisitions tax, capital gains tax, income tax, inheritance tax and stamp duty implications may arise.

Inheritance tax is a tax which can arise when a beneficiary receives an inheritance from a deceaseds’ estate.

Inheritance tax is payable whether the beneficiary received the gift under the terms of a Will or under the rules of intestacy.

However, a distinction is made between beneficiaries who are surviving spouses and all other types of beneficiary.

Surviving spouse

A surviving spouse, taking a gift from their deceased spouse, will take this inheritance completely free and exempt from any inheritance tax.

Other beneficiaries

For all other beneficiaries the amount of inheritance tax to be paid depends on the following factors;

– the total value of all gifts received by the beneficiary in the inheritance
– the value of gifts received by the individual beneficiary
– the value of the gift received by the individual along with any other gift received which may have been received from another third party
– how the gift fits into the threshold of the beneficiary
– the ‘tax free amount’, that is, in the period from 5th December 1991 up to and including the date of the inheritance.

The ‘tax free amount’ is subtracted from the value of the market value of the property comprised in the inheritance.

Once the taxable value has been ascertained, debts, incumbrances and certain testamentary expenses can also be deducted, the rate of tax to be paid are as follows;

– under the ‘threshold amount’ is nil
– 25% tax is paid on the taxable amount

With regard the amount of ‘tax free amount’ a beneficiary receives this depends entirely on the relationship of the beneficiary with the deceased. The indexed Group thresholds for 2008 and 2009, as per the Revenue Commissioners, are set out as follows;

Group Relationship to Disponer Group Threshold 2008 Group Threshold
from
1 January 2009 to 7 April 2009
Group Threshold
from
8 April 2009
A Son/Daughter €521,208 €542,544 €434,000
B Parent*/Brother/Sister/
Niece/Nephew/Grandchil
€52,121 €54,254 €43,400
C Relationship other than Group A or B €26,060 €27,127 €21,700

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