Q In my will the proceeds from the sale of my house are to be divided equally between two beneficiaries. I want to make sure that any capital acquisitions tax (CAT) due will not have to be paid to Revenue until the house is actually sold, even if the sale takes more than a year. If I word my will to say, “My house is to be sold and the ‘sale price’ divided equally between the beneficiaries”, will this be achieved?AnswerThe short answer is “no”, says Caila Ryan, solicitor at Carmody Moran Solicitors, Blanchardstown. “This wording does not, by itself, ensure that CAT will only become payable when the house is sold,” says Ryan.Capital acquisitions tax is paid by the receiver of a gift or inheritance at 33 per cent on amounts above certain thresholds, determined by the relationship to the giver. Children can inherit up to €400,000 tax free over a lifetime from parents, with tax kicking in above that.Precisely when the tax on an asset is due is determined by the timing of its valuation. There are three possible scenarios and it is the earliest of these three that determines when the tax is due, says Ryan.These are the date the executor is entitled to “retain” the asset for the beneficiary (that is, when probate is granted and they can sell the asset); the date the asset is actually retained (or sold); or the date the asset is transferred to the beneficiary.“The grant of probate is going to issue first, so this will determine when CAT is due here,” says Ryan. That is providing the beneficiaries don’t have possession of the house before this.If the valuation date falls between January 1st and August 31st, then the payment deadline would be the October 31st. If it’s between September 1st and December 31st, then the tax isn’t due until October 31st the following year. Executors can’t just hang on to the house with tax not payable by beneficiaries until it sells; there would have to be a genuine reason, like title difficulties, says Ryan.The valuation date for CAT purposes here would generally be the date the grant of probate issues, she says. Wording in the will can’t change that. “Executors have a duty to act without undue delay. It’s not enough to say, the tax isn’t being paid because we haven’t sold the house.“If the grant of probate is issued in February and it is now September, you are expected to file your return by October 31st, and you will need to make a case to Revenue to postpone that payment. Revenue will want to know the reason for the delay,” says Ryan.Those who anticipate difficulty paying on time should engage with Revenue early, she says. “Revenue can in certain cases postpone the payment, or you can enter into a phased payment agreement with them (which may attract interest). The most important thing is to contact them in advance of any deadline to reduce a potential risk of additional interest.”A substantial difference between the valuation of the property at the time of death and how much it ultimately changes hands for can generate a separate capital gains tax (CGT) bill.If the house is valued at €500,000 at the date of death, for example, but it is later sold for €700,000, the estate can be liable for CGT of 33 per cent on the difference.“It’s an estate gain, so it’s the estate that has to pay the tax on the post-death gain of €200,000,” says Ryan.Expenses, like estate agent and solicitor fees, can be deducted from the €200,000.If the house sells for less than the probate valuation, the estate does not pay CGT on the sale, and beneficiaries may be able to claim an overpayment of CAT. A sale price that is significantly lower however may draw Revenue scrutiny.While an executor must administer your estate in accordance with your wishes, wording in your will won’t have the power to prescribe when tax is due. Of course, if a beneficiary inherits cash from the estate, they may have funds to pay the CAT before any sale of the house completes. “Someone could inherit €100,000 from a bank account earlier than the house sells, so this could provide the money to pay the tax bill,” says Ryan. “These funds are still a gift that tax must be paid on, but the balance could be used to pay the tax on the house.” The name of the reader who submitted the question is not being published to protect the identities of those involved.Please send your legal queries to Joanne Hunt, Ask the Lawyer, The Irish Times, 24-28 Tara Street, Dublin 2, or by email to joanne.hunt@irishtimes.com with a contact phone number. This column is a reader service and is not intended to replace professional advice.