Will my partner or I be liable for Inheritance Tax

M

mary smith

Guest
My partner and I bought a house together just over 5 years ago (we are not married). The house and mortgage are in both our names. We have also made Wills leaving the house to each other. We were advised at the time that if one of us died the other would not be liable for Inheritance Tax provided we had been living in the house at least 3 years - we are now hearing that this is not true. Can someone please clarify the situation?
 
There are two ways to buy a house together - 'joint tenancy' or 'tenancy in common' - which have different impacts when one partner dies. If you can confirm which type of contract you have, we may be able to clarify the impacts for you.
 
Would it not just be easier for you to get a civil marriage service at a registry office, and avoid all the possible probate and IHT problems ?
 
Inheritance Tax

Our Building Society has checked with the Solicitors and informs us that 'the Land Certificate is issued and states that we are full owners'. I don't know if this is sufficient information for you?
 
Inheritance Tax

Anything useful here?




This one mentions a three year residency condition which sounds like the one you mention above...
 
Inheritance Tax

... also, unless there are good reasons why you should not/cannot get married then I would second NOelC's point above as it simplifies matters a lot and also may be beneficial from a tax point of view (not that I'm advocating these as the MAIN or ONLY reasons to get married mind! :) ).
 
Inheritance Tax

Thanks for info re Oasis websites - it would definitely seem from them that we are Joint Tenants so I would be interested in hearing how this affects us regarding IHT.
 
CGT

Since you are not married you are liable to Capital Gains Tax on death of the partner. You are treated as "strangers" under the law. It doesn't matter if you have lived together for 50 years, unless you are married you will be screwed by the tax man.

I don't mean to scare monger, but I am really shocked at the number of co-habitees who are completely unaware of the financial implications of not marrying. Its really quite harsh. No wonder gay couples are so enthusiastic about it.
 
Re: CGT

There is no Capital Gains Tax payable on death. Death is not regarded as a disposal for Capital Gains Tax.

If a person receives a gift or inheritance of a house which they have occupied for at least three years, they are exempt from Capital Acquisitions Tax, as long as they don't have another house.

In your case, if your partner dies, I don't think that you will qualify for the exemption as you already own a house. But, I don't know. Contact the Capital Taxes section of the Revenue. It's a straightforward question and I imagine that you will get a straightforward answer.

If you are subject to tax, you will pay 20% of the value of the property received. ( First €23,000 exempt). It's not nice paying it, but it's certainly not the end of the world. I would not recommend getting married to potentially avoid this tax.

Brendan
 
Thanks for replies - actually neither of us owns another house - this is our only property and we have been living in it for over 5 years.
 
Myself and my partner have been together for 10 years and I am still waiting to be asked. We are living together for about 4 years and have a little boy. I am in the same perdictment as the original user. What is the best way to avoid leaving my partner with a messy tax sitaution if I drop my clogs. I was thinking of getting a will and leaving the house to my son but this may only push the problem back a couple of years for my partner. I also have a property abroad (Spain) and property in the North, can anyone provide an insight into how to handle this situation in the event of my untimely demise?
 
What you heard was true, you have Private Dwelling Exemption if you have lived in the house for 3 years however you also must, to qualify, continue to live in the proerpty for a further 6 years(and have no interest in any other property). If you do sell within the 6 years and use all of the proceeds for the purchase of another property then the exemption still applies. If you are over the age of 55 at the date of acquisiton then the 6 year rule does not apply.
 
Have just gone through paperwork on an inheritance recently and claimed the dwelling home exemption which is what you are talking about. Revenue confirmed that there did not have to be a family connection to qualify for this exemption.

There are three restrictions :

1. You have to be living there for three years
2. Have no interest in any other property
3. Continue to live there for another 6 years

My solictor advised me that you could own other property during the 6 years but not at the time of the inheritance.

As suggested above it would be worth checking with Revenue (CAT office in Cathedral Street, Off O'Connell Street) as they were very helpful in answering questions.

Don't forget however that just because this exemption is available now it may not be there when you need it which hopeful will be well down the road. As my solicitor commented you never now what governments will do down the road.
 
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