INHERITANCE TAX
Liabilities For Cohabiting Couples
DOES THIS AFFECT YOU?
Assets passing on death between married couples or civil partners are exempt from Inheritance Tax. BUT this exemption only applies in the case of “legal spouses” and same sex registered civil partners.
All other couples are treated as strangers for Inheritance Tax purposes and the threshold is currently €16,250. Inheritances in excess of this are subject to tax at 33%.
On the death of a non married partner Inheritance Tax will be payable on the total value of all assets, regardless of how long the couple have lived together. Where a ‘co-habiting partner’ inherits assets, the €16,250 threshold could easily be exceeded.
Family Home Relief
- have occupied the house as their sole or main dwelling for three years prior to the date of the inheritance,
- at the date of the inheritance does not hold an interest in any other dwelling house,
- continue to occupy the house as their sole or main residence for 6 years after the date of the inheritance.
EXAMPLE
You should review your family and mortgage protection arrangements to ensure that they are set up in the most tax efficient way possible. J M Walsh Financial Advice can conduct this review and advise on any changes need to cover and reduce your liability for Inheritance Tax
*These examples are provided for illustration purposes only.
Mary and John have lived together for 10 years. They have never married. They have two children
If John dies Mary inherits as follows
|
1/2 Family home |
€225,000 |
|
1/2 Life Assurance |
€250,000 |
|
John’s Pension |
€240,000 |
|
1/2 Apartment |
€40,000 |
|
1/2 Savings |
€25,000 |
|
Total |
€780,000 |
|
Less Tresshold |
€16,250 |
|
Taxable at 33% |
€763, 750 |
|
MARY´S TAX BILL |
€252,037 |
Their assets are as follows.
|
Family Home- jointly owned |
€450,000 |
|
Life Assurance - dual life |
€500,000 |
|
John’s Company pension |
€240,000 |
|
Apartment in Turkey |
€80,000 |
|
Various savings and investments |
€50,000 |
If Mary dies John inherits as follows
|
1/2 Family home |
€225,000 |
|
1/2 Life Insurance |
€250,000 |
|
1/2 Apartment |
€40,000 |
|
1/2 Savings |
€25,000 |
|
Total |
€540,000 |
|
Less Tresshold |
€16,250 |
|
Taxable at 33% |
€523,750 |
|
JOHN´S TAX BILL |
€172,837 |
