Inheritance tax question

One_Of_Shanks

Hi, hoping someone can put our minds at rest here.

Myself and my good lady live together in a house we bought a few years ago, joint ownership and both names on deeds. But we are not married.
We both willed the house to the surviving partner in the event of death.

Our question is this, If I die first lets say, does she have to pay CAT/Inheritance tax on my share of the house due to us not being married?

Obviously its a concern as the surviving partner could be left with a huge tax bill and have to sell the house.

Thanks in advance

exaisle

Are you "joint tenants" or "tenants in common"?

One_Of_Shanks

exaisle wrote: »

Are you "joint tenants" or "tenants in common"?

I'm not actually sure. All I know is that when we signed the mortgage the solicitor said the house would automatically pass to the other party in the event of death.
Beyond that I'm not sure.

One_Of_Shanks

ID@THEWIDOWS wrote: »

Where you are joint tenants when one person dies the other takes complete ownership of the property by survivorship. Now what will happen on death is that when you die she will take your half of the property irrespective of the will and this is considered to be taken at market value. She will be taxed on this half of the property for Capital Acquisitions Tax at 33%. There will be no CGT repurcussions in respect of this. As you are not married she will be considered as a stranger in blood and only be able to avail of a Class C Threshold which is currently €16,250. Whether you are a joint tenant or tenant in Common should be in the Deeds or ask your Solicitor

Thanks. But from what I heard on another forum there would be no tax applicable as we've been living together in the house for over 3 years etc?

Lockedout2

One_Of_Shanks wrote: »

Thanks. But from what I heard on another forum there would be no tax applicable as we've been living together in the house for over 3 years etc?

https://www.revenue.ie/en/gains-gifts-and-inheritance/cat-exemptions-and-reliefs/exemption-for-dwelling-house/index.aspx

Peregrinus

One_Of_Shanks wrote: »

Thanks. But from what I heard on another forum there would be no tax applicable as we've been living together in the house for over 3 years etc?

That may have been true when you heard it, but the law was amended a little over a year ago to restrict the scope of the exemption. In addition to the other conditions (live in the house for 3 years before inheriting it, remain in the house for 6 years after inheriting it, have no other house) the survivor now won't get the exemption unless he or she is a "dependent relative" of the deceased. A non-marital conjugal partner is not a relative at all, never mind a dependent relative. So, yeah, as matters stand whichever of you survives the other is looking at a signficant CAT charge, unless you marry before one of you dies.

Lockedout2

Peregrinus wrote: »

That may have been true when you heard it, but the law was amended a little over a year ago to restrict the scope of the exemption. In addition to the other conditions (live in the house for 3 years before inheriting it, remain in the house for 6 years after inheriting it, have no other house) the survivor now won't get the exemption unless he or she is a "dependent relative" of the deceased. A non-marital conjugal partner is not a relative at all, never mind a dependent relative. So, yeah, as matters stand whichever of you survives the other is looking at a signficant CAT charge, unless you marry before one of you dies.

I think that only applies to gifts.

The Finance Act 2016 introduced changes to the qualifications which apply to inheritances on or after 25 December 2016. You will be exempt from CAT on a house you inherit if:

- the house was the only or main home of the person who died
- you lived in the house as your main home for the three years before the person’s death
- you do not own, have an interest or a share in any other house, including one you acquired as part of the same inheritance
- the house is your main home for six years after you receive the inheritance.

This does not apply if you are over 65.

Peregrinus

Lockedout2 wrote: »

I think that only applies to gifts . . .

You're quite right. My mistake!