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How much money do you have to pay out to inherit a house?

Some properties can be too expensive to inherit.

Image: Shutterstock/eelnosiva

HAVING A RELATIVE pass away is difficult for anyone and matters can often be made harder when dealing with somebody’s will.

When inheriting a house, most of the time, tax will have to be paid on it – and circumstances can arise where this bill is so high that it can prevent a person from retaining possession of the property.

The beneficiary is responsible for paying the tax on a large item on this.

What do you have to pay to inherit a house?

The amount that a person might have to pay out depends on two things: the value of the house and the relationship of the person inheriting it to the deceased.

A spouse or civil partner is required to pay no tax, regardless of the property’s valuation.

For all other beneficiaries, a tax-free threshold amount is afforded, after which  Capital Acquisitions Tax has to be paid.

These beneficiaries are split into three different groups.

Sons and daughters receive the largest tax-free amount, being able to inherit €225,000 without charge.

This figure has come down substantially in recent years. In 2009, the amount sons and daughters were able to inherit was as high as €434,000.

The second group is made up of parents, brothers, sisters, nieces, nephews and grandchildren, all of whom are able to inherit €30,150 tax-free.

The third group includes any other type of relation and people in this group have their tax-free inheritance set at €15,075.

Could a house be too valuable to inherit? 

It is not infeasible that a person tax bill in such circumstances would require the beneficiary to sell the inherited property.

A house costing €500,000, left by a person to a son or a daughter would leave them with a tax bill of €90,750.

For people in the second group, this amount would be substantially higher. The tax they would be required they would be required to pay out would be €155,050. 

A person in the third group would be worse off again, with a bill of €161,684 on an inherited property valued at €500,000.

Read: Michael Noonan is putting the squeeze on banks – but will any cut mortgage rates?

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