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Section 60

  • 10-04-2007 3:21pm
    #1
    frizzefreckles
    Closed Accounts Posts: 152 ✭✭


    Hey everyone,

    firstly mods if i've posted this in the wrong place sorry and ooops.

    I've recently bought a house with Mr F as an investment, now the house is in my name while we have a joint mortgage for it. The sale closed last week and we are about to sort out our wills. Now he owns the apartment we currently live in and he wants to now leave the apartment to me and I want to leave the house to him. Our solicitor explained that as we are not married should (god forbid) anything happen to either one of us the other will get hit for a huge amount of tax - 20% of the value of the inheritance.
    Over the weekend we heard about a loophole called section 60 which is an insurance that should cover that tax therefore costing us nothing. When we asked about it today we were told that it was a waste of time.
    I'm confused now, has anybody come across this section 60 before, has anyone availed of it? Some advice here would be greatly appreciated.


Comments

  • #2
    Victor
    Registered Users, Registered Users 2 Posts: 78,579 ✭✭✭✭Victor


    I imagine you are just paying for a simply insurance policy, one that you may not need if he pops the question. ;)


  • #3
    frizzefreckles
    Closed Accounts Posts: 152 ✭✭frizzefreckles


    It seems to be a way of insuring our wills, so if something happened to me this section 60 would kick in and pay out enough to cover his inheritance tax.
    There won't be any questions being popped any time soon so that's why this is important to us.


  • #4
    antoinolachtnai
    Registered Users, Registered Users 2 Posts: 9,815 ✭✭✭antoinolachtnai


    At the end of the day this is just life assurance to cover the amount of the inheritance tax.

    The trick with section 60 is that the proceeds of the policy are themselves exempt from capital acquisitions tax, providing you use them to pay a capital acquisitions tax bill (i.e., the bill arising from the inheritance of the dead partner's property). It is *not* will insurance.

    Look at http://www.primafinance.ie/PrimaFinance/TAX04.asp and scroll down to the part about section 60.

    You could get this extra cover, and increase it every year, as the property grows in value. But do you really need this insurance? How much will the CAT actually be? If other life assurance pays off the mortgage on the property, and if there is rental income from it, you would still be able to go out and raise a mortgage to pay off the CAT.

    If one or both of you were elderly, or if you only had one property, it would probably be worth going for this type of insurance. Also, if you had no other insurance whatsoever, you might need it but I imagine you do.

    But really it's up to you and banter on boards.ie is no substitute for solid financial advice.


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