Co-habiting in Ireland

Approx. 1 in 10 people are co-habiting in Ireland. Are you one of them?

Assets passing on death between married couples are exempt from Inheritance Tax. Did you know this only applies in the case of “legal spouses” or “registered civil partners”. All other couples, even qualified cohabitants, are treated as strangers for Inheritance Tax purposes. 

The stranger threshold for Inheritance Tax is currently €16,250 (2020). Inheritances in excess of €16,250 are subject to tax at 33%. Source: Capital Acquisitions Tax Consolidation Act 2003 (as updated) 12th October 2016.

Let’s take an example:

Mary and John have lived together for 10 years. They have never married. They have two children. 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 John dies Mary inherits as follows:If Mary dies John inherits as follows:
½ Family Home€225,000½ Family Home €225,000
½ Life Assurance€250,000½ Life Assurance€250,000
John’s pension€240,000Mary’s pension€0.00
½ Apartment€ 40,000½ Apartment€ 40,000
½ Savings€ 25,000½ Savings€ 25,000
Total €780,000Total€540,000
Less threshold€ 16,250Less threshold€ 16,250
Taxable at 33%€763,750Taxable at 33%€523,750
Mary’s Tax bill€252,037John’s Tax bill€172,837

This example is provided for illustration purposes only. Subject to underwriting criteria, terms and conditions apply.

Will you have to pay inheritance tax on the death of your partner?

If you think this affects you we would invite you to contact our Financial Advisors with a view to reviewing your family and mortgage protection arrangements to ensure that you and your family receive the proceeds of your life assurance policy when you need it most in the most tax efficient way possible.

Call us today on 098 51605, Email or visit Life for more information. We look forward to speaking with you.

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