Unmarried couples could not be exempt from inheritance tax

Can you clarify the inheritance tax of unmarried partners? I have been living with my partner for 25 years in the house he owns. I have no other home. If he were to die, what would my tax liability be?

And EC

One of the biggest reassurances for Irish families is the knowledge that when a spouse or partner dies, the one thing they don’t have to worry about is tax.

The Capital Acquisitions Tax Consolidation Act 2003 ensures that anything that passes from one partner to another is not taxed.

Section 71 of the act, commonly referred to as Catca, is one of the clearest and simplest of Irish laws. It says: “Notwithstanding the other provisions of this Law, the inheritance taken by the successor, who on the day of inheritance, the spouse of the guardian. [the person providing the asset]it is exempt from tax and is not subject to computer tax.”

Crystal clear. Regardless of what’s legal, running into 118 heavy pages, transfers between spouses are ignored when it comes to tax assessment.

Section 70 of this Act in almost identical terms says the same about any gifts that pass between spouses during their lifetime.

The same applies to civil partners, although this only applies to same-sex couples who registered their partnership between 2011 and 2016 when the same-sex marriage law was introduced.

The point is that a growing number of people in Ireland are not covered by this blanket protection.

According to me there is talk of the “right to inherit” in this country. Anyone who reads this page regularly will know how I feel about the sense of entitlement that some people have in relation to inheritance, especially if it means that a parent spends their later years in fear of spend money to make sure there is something left.

Now there is a group that has been very vocal lately calling for the tax to be abolished altogether. Alan Shatter, who recently described the inheritance tax as “not a tax on wealth but a tax on anger or jealousy, based on anachronistic socialism, which does not take into account the importance of responsible living, financial planning, working with hard and generous”. this camp.

Apart from some wild comments about double taxation, he carefully ignores the existing concentration of wealth in Ireland and the fact that abolishing inheritance tax would exacerbate this social divide. While he correctly notes that less than 1 per cent of Ireland’s tax revenue comes from income tax, that’s still €640 million that the Government will have to find somewhere. where.

Finally, there is concern among single people that their beneficiaries will not benefit from the Class A exemption and the gift tax that applies from parent to child. Some of this group may not have children; others choose not to. Either way, the A group is specifically designed to provide some relief to the immediate family through family property. If you don’t have children, it doesn’t matter to you – whether you are single or not. Single people are treated no differently than other people under the tax system.

There is only one group that has, in my view, a real reason to complain and that is precisely those who find themselves in your situation – unmarried partners.

It seems completely inconsistent in 2024 that two families are treated differently because one is married and the other is single. Where the Government and its tax policy chooses to support families, it should do so equally. And it doesn’t.

Take your case. This is not a fly-by-night arrangement. You’ve been with your partner for 25 years and it’s clear that it’s a stable family – marriage or no marriage. But if he dies, you will be treated as a stranger. If he does not make a will, you will not be entitled to anything under the laws of intestacy.

And even if he were to leave you everything he owns in a will, you would be treated as a stranger, entitled to get the lowest tax payment – € 16,250 at most. Everything he owns above the value that comes to you will be taxed at 33%.

This is a classic example of how Irish law promotes marriage, rather than family. It was a time when almost all marriages in Ireland were religious, as well as civil.

But as the numbers available to us show, that’s far from the case these days.

Data from Census 2022 shows that of the 1.28 million households in Ireland, around 177,000 are unmarried couples with or without children. That’s about 14 percent of the total, or one in seven.

That is not to be confused with single-parent families, which account for another 220,000 families.

And the number is rising. The 2022 number is a 16 percent increase on the number of the previous census six years ago.

Obviously all single family groups are not the same and different levels of commitment may be involved but personal experience suggests that most are no different from married people in their approach to family life. . It is past time that the Irish Government and its tax system took steps to treat all families equally.

I think it’s inevitable, given the electoral pressure of numbers, that it will happen over time. Will that come in time for you? I will not say. These things generally take longer than they might seem.

In the meantime, you’re left with an unpopular choice that I’ve seen many couples make down the years – getting married for no other reason than to control succession and inheritance.

However, before you get too down about your status, there is some good news. As long as your spouse’s home is left to you in his will, you can claim relief under the homestead exemption.

You qualify because you will have lived there for at least three years before he dies and have no other assets. You should also have no problem meeting the conditions for you to continue living there or in another place acquired with the entire sale proceeds of this home for up to six years.

If you are over 65 years of age on the date you inherit the property, this six-year rule is waived. If not, and if you don’t use all the proceeds from any sale of the current home to buy another property, the Revenue can reclaim the remaining property tax.

Of course, your spouse can always put property in your joint names at any time, ensuring that it passes to you regardless of whether there is a will or not.