Written answers

Tuesday, 9 June 2015

Photo of Brendan GriffinBrendan Griffin (Kerry South, Fine Gael)
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280. To ask the Minister for Finance his views on correspondence (details supplied) regarding cohabiting couples who own a shared property; and if he will make a statement on the matter. [21350/15]

Photo of Michael NoonanMichael Noonan (Limerick City, Fine Gael)
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The details supplied refer to the tax situation for unmarried cohabiting couples when one partner inherits from the other.

I am informed by the Revenue Commissioners that spouses or civil partners who inherit property from each other are exempted from the payment of inheritance tax on that inheritance. Other cohabiting couples are, however, liable to inheritance tax where the surviving partner inherits property from the deceased partner. The relationship between the deceased person and the person who inherits the property determines the maximum life-time aggregate tax-free threshold below which inheritance tax is not charged. There are, in all, three separate relationship thresholds (set out below). The value of each of a person's inheritances since 5 December 1991 is aggregated and inheritance tax is charged, where the aggregate value exceeds the relevant threshold, on any amount that exceeds the threshold.

Group A: tax free threshold €225,000applies where the beneficiary is a child (including adopted child, stepchild and certain foster children) or minor child of a deceased child of the deceased person. This threshold also applies to parents where they inherit an absolute interest in a property from a child.

Group B: tax free threshold €30,150applies where the beneficiary is a brother, sister, nephew, niece, lineal ancestor (for example, a grandparent) or lineal descendant of the deceased person.

Group C: tax free threshold €15,075applies in all other cases, for example, from uncle to niece, between in-laws and persons with no relationship to each other.

Cohabiting couples can, however, in certain circumstances be exempt from the payment of inheritance tax in respect of the inheritance of a dwelling house. The main conditions attaching to this exemption are that the person who inherits the dwelling house must have lived there for a minimum of three years prior to the inheritance and must not have had an interest in any other dwelling-house. Also, with the exception of persons who are aged 55 years or over at the date of the inheritance, he or she must continue to live in that dwelling-house, as his or her only or main residence, for a period of six years commencing on the date of the inheritance. This exemption ensures that what may be the family home for many people will not be liable to inheritance tax when it is the subject of an inheritance.

Given the existence of this provision I do not consider it necessary at this time to modify the tax legislation with regard to unmarried cohabiting couples.

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