John Lowe answers your money questions
Q I am planning to leave my house to my son when I die. The house is worth about €500,000. It is in three apartments -- one of which my son has resided in for over 10 years. My son is not married and lives on his own. The main entrance is common to the apartments. On the deeds, the property is classified as one house. Will my son inherit only a third of the house tax-free when I die or the complete house?
A They say a harp is a piano after taxes and you are quite right to plan to minimise tax liabilities on your estate -- especially for the sake of your son. Many issues arise such as the planning requirements for the three apartments, separate meters, health and safety, leases and so on.
Leaving all those aside, because the property is still classified as one house and if your unmarried son has no other property, has lived there for at least three years and intends to live there for at least another six years after your death, it is likely the entire property can be willed to him without giving rise to any Capital Acquisition Tax. liability.
However, I am presuming you live in one apartment, your son in another and you have a tenant in the third. You will need to be aware of the tenant's rights and check the lease agreement to ensure the transition of ownership goes ahead smoothly after you pass on. If you have other assets that you wish to bequeath to your son, he may receive up to an additional €225,000 tax-free -- with anything over this amount taxable at 33 per cent. You could also give the tenant up to €15,075 tax free to sweeten his departure!
One final point, handing over the property now with a right of residence for yourself until death can have one complication -- if your son predeceases you, he could have left the property to a charity in his will. Caveat.
Q I'm planning to order most of my Christmas presents online. I've spotted some gifts I'm interested in -- but the websites appear to be based in Hong Kong, the island of Jersey and the USA. Do I need to worry about customs charges if I order through these websites -- and if so, what kind of customs charges could I get hit with?
A Yes, Patrick you do -- as this can be quite complicated. Once the sender declares the value and content of your package, it becomes liable to all sorts of charges. For instance, if you order clothing from non-EU-based suppliers -- such as from the US -- you will pay customs duty and VAT.
Customs duty is based on the total cost of the package -- which includes the purchase price, insurance, and freight costs. On this total figure, you pay customs duty of 12 per cent. After adding the customs duty to the total cost of the clothing, VAT is then charged at 23 per cent.
So let's say you order a suit from the US which costs $206. That converts to about €150. Insurance costs €15 and there is a €35 freight charge. The total cost for customs duties purposes is €200. Customs duty comes to €24 -- which brings the cost to €224. VAT is then charged, and you pay €51.52. The extra charges for the duty and VAT come to €75.52. In addition, the delivery company will ask for payment of customs duties before releasing the clothing to you. If goods are delivered through An Post, it will apply its own handling charge of €6.
Buying in the EU territories does not attract custom duty but there are many rules, regulations and conditions. A word of caution: be careful if buying from foreign websites you haven't used before.