I bought some UK shares some years ago, now worth €600,000, that cost me about €300,000.
If I leave them undisturbed, would my estate be charged CGT on the capital gain, when I die, or would the gross value be available for distribution to my beneficiaries?
Mr D.O’C., Dublin
In the first place, well done. Your investment has doubled in value which is always a good outcome.
As you suspect, if you were to cash in these shares during your lifetime, you would be liable to capital gains tax (CGT) on the €300,000 by which they have gained in value, minus your capital gains tax exemption of €1,270.
With a CGT rate of 33 per cent, that would leave you with a not inconsiderable bill of€98,581.
This assumes that you have no other assets which are currently nursing a loss and which you also wish to sell. If that were the case, any losses crystallised by a sale would be offset against the gain in the year of the gain was made.
If the loss was not fully offset, any residual loss would carry forward for setting against gains in future years until it is all accounted for.
So that’s the position if you were to sell the shares at their present profitable position.
If, however, you hold on to them until you die, any capital gain will die with you and the shares will pass on to your estate at whatever their market value is at that time. Depending on the terms of your will either the shares will be passed on to your beneficiaries, or they will be liquidated and the cash sum allocated as per your wishes.
In either case, no capital gain applies, although your beneficiaries may, depending on their relationship with you and the amount they receive from you in inheritance, have a liability to capital acquisitions tax.
Of course, that all presumes the position of the shares when you die is as it is now. Who knows, they could continue to gain in value, making the written-off gain on your death an even bigger sum, or they could lose some or all of their present value. There is no certainty in the equities game.
Please send your queries to Dominic Coyle, Q&A, The Irish Times, 24-28 Tara Street, Dublin 2, or email dcoyle@irishtimes.com. This column is a reader service and is not intended to replace professional advice
