Inheritance tax - Married Couple

Eggs For Dinner

Just looking for clarification on thresholds. I see a child may inherit 335k from a parent before tax is payable. Is the threshold per individual or is it cumulative for married couples?. E.g. Wife inherits 200k from her father, husband inherits 300k from his father. Couple are normally taxed as a couple for income. In this scenario, are both inheritances below the threshold or is the cumulative surplus over 335k taxable?

Any information appreciated

namenotavailablE

It's per person. Each child has a lifetime 335k tax-free threshold in respect of gifts/inheritances from their parents.

In the scenario given, no CAT is due.

namenotavailablE

Just to add, the husband will need to submit a CAT return as he has exceeded 80%of the relevant threshold.

Peregrinus

To add: Married couples are not jointly assesses for gift/inheritance tax purposes. So one spouse couldn't transfer an unused threshold amount to the other.

Eggs For Dinner

Thanks all

Eggs For Dinner

Can I ask for a bit of follow up advice? Having received an inheritance, which is below the taxable threshold, can I then gift a significant sum to my children while I'm still alive?. My reading of the situation is that I can and there is no tax liability on my children, but it goes towards their lifetime aggregate receivable from a parent

Again, all advice appreciated

Peregrinus

https://www.boards.ie/discussion/comment/122651677#Comment_122651677

Your understanding is correct. You can make gifts to your children wich go towards their lifteime threshold but, as long as the gifts don't take them over that threshhold, your children will have no CAT liablity.

As the inheritance you yourself have received is below the parent/child threshold, it follows that any gifts you make to your children out of your inheritance must also be below the parent/child threshold. The only way the gifts could incur a CAT liability is if your children have previously received gifts from you or their other parent and this latest gift, when aggregated with the earlier gift, exceeds the threshhold.

Stationmaster

https://www.boards.ie/discussion/comment/122651677#Comment_122651677

You could gift them €3k a year, every year, and it wouldn't affect their threshold.

Eggs For Dinner

All very clear now. Thanks

SureYWouldntYa

One thing to be careful about is gift splitting rules where you re-gift within 3 years

If for example OP you got €100k cash from your parents, and 1 year after this you gift the €100k to your own children, the gift will be deemed as having come from their grandparents and they are liable to exemptions under Group B rather than Group A

Now if you had €200k in your bank account before this, your inheritance increased it to €300k then you could argue the gift to your own kid is out of the initial funds, short of this situation for cash it will be caught by gift splitting rules if done within 3 years

Eggs For Dinner

Thanks for that important information

Firblog

https://www.boards.ie/discussion/comment/122648280#Comment_122648280

Is that 335K from each parent or both parents?

namenotavailablE

It's both parents - so if you received €100,000 from your mother followed sometime later by €300,000 from your father, you'd pay tax on €65,000 received from your father (€400,000 cumulatively received from your parents -€335000 exemption).

Eggs For Dinner

https://www.boards.ie/discussion/comment/122653490#Comment_122653490

Can I enquire further about this. If I pass on the ,€32.5k Category B limit to my children and say it was a gift their grandparent, will that leave the Category A limit of €335k fully intact for future events?

SureYWouldntYa

https://www.boards.ie/discussion/comment/122655215#Comment_122655215

A gift will only fall under 1 threshold at a time and you don't pass the threshold, rather the gift is deemed as having come from the grandparent.

If you gift within 3 years, its considered as coming from grandparents and will reduce their Group B threshold accordingly. Group A will remain untouched in this scenario. This could actually be beneficial if there is nobody they will ever receive a gift or inheritance from in Group B which would otherwise go unused, since there is only a limited amount of people that call fall within Group B you may have a good idea of this.

If after 3 years, will be considered as coming from you and will reduce Group A threshold accordingly. Group B will remain untouched.

Eggs For Dinner

Thanks again. Shrewd tactics required.