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

The Finance Act 2000 introduced a complete exemption from Inheritance Tax on the value of “a dwelling”, provided the person inheriting the property satisfied certain conditions – basically that it was, and continues to be, their home. This is commonly referred to as ’family home” relief. The relief is available to any individual who satisfies the conditions and not just to qualified cohabitants. To qualify for the exemption the person who inherits* the home must:
  •  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.
What this means is, once a couple have been living in the house for 3 years, regardless of which of them own the house, paid the mortgage or the mortgage protection policy, there will be no Inheritance Tax liability on the value of the house if the above conditions are met.

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
Book a Consultation
close slider

BOOK A CONSULTATION

1 to 2 hours

NO CHARGE

3 hours

€60

4 hours

€100

5 hours

€140

Contact Us

JM WALSH FINANCIAL97, Lr Main St Rush Co. Dublin