Wills/Intestacy, Capital Gains Tax, inflation multipliers, accrued losses and the annual capital gains tax exemption on share dealings.
Wills/Intestacy – In general, the date of death will generally be taken as the date of transfer of a bequest even though you may not have received effective control until sometime after that.
Capital Gains Tax – the capital gains tax rate is currently 33%
Inflation multipliers – up until the 31st of December 2001 the tax year ran from the 1st of April till the 31st of March. If you received a gift/inheritance in the first quarter of the year (before 31st March) a better inflation multiplier applied than receiving a gift/inheritance after the 1st of April of that year.
From the 1st of January 2002 the tax year ran till the 31st of December and subsequently so no differentiation was made on the date of receiving the gift/inheritance.
Accrued losses – if you have accrued losses on other share dealingsthat have not previously been set off against other gains, these should be used up before assessing capital gains (or availing of the annual exemption).
Annual capital gains tax exemption – there is an annual capital gains tax exemption of €1,270 in any given tax year before liability to capital gains tax kicks in. This cannot be carried over so to maximise the benefit of the annual CGT exemption it is best to spread out the sales over a number of years.
Example:
An inheritance of 1,000 shares at a value at that time of €1on or before the 31st March 1990 the effective inflation multiplier taken from the Revenue Commissioners publication is 1.503. (1,000 x 1,503 = €1,503)
If the date of death is after the 1st of April 1990 the inflation multiplier taken from the Revenue Commissioners publication is 1.503. (1,000 x 1,442 = €1,442)
If now sold for €10 per share €10,000 – €1,503 = €8,497
Less exemption €1,270
Gain €7,227 @ 33% tax – Tax payable €2,384.91