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Buachaill
Buachaill, Lawyer
Category: Republic of Ireland Law
Satisfied Customers: 10359
Experience:  Barrister 17 years experience
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My father is exploring the most tax-efficient way to pass on

Customer Question

My father is exploring the most tax-efficient way to pass on his assets. My mother died last year and he is thinking about how to manage the inheritance for my sister and me (only two siblings). He is wondering about signing over his house to us jointly (we both own our own residences). She is married with no children. I am married with two.
Submitted: 1 year ago.
Category: Republic of Ireland Law
Expert:  Buachaill replied 1 year ago.

1. EAch child can be gifted or inherit 250,000 euros tax free from their father. So the tax efficient means of dealing with the house depends upon how much the house is worth. The fact you each own your residence does not affect matters. Additionally, each of your father's grandchildren can inherit 32,000 euros tax free from him. So you should also consider utilising these tax free allowances as well.

Customer: replied 1 year ago.
Thank you. Those thresholds are different to those currently published online by Revenue. Are they index-linked?We estimate the house to be worth up to circa €350k and he has up to €200k invested. Occasional gifts to his my sister and I over the past ten years accumulate to exceed the thresholds based on those estimates so he is wondering about other potential options.
Expert:  Buachaill replied 1 year ago.

2. Yes, I see that the threshholds published by the Revenue on their website are 10% lower than the figures I have given you. These figures from the Revenue are the more up to date ones. Secondly, there is a method whereby you could inherit the house tax free if one of you was carer for your father and looked after him before he died. You would have to have occupied the house as your main residence for 3 years before he died and you would have to continue to occupy it for 6 years afterwards. However, the one thing is that this must be you only or main residence. See http://www.revenue.ie/en/tax/cat/leaflets/cat10.html. I know that both yourself and your sister own your own homes so this might not be suitable.

3. The only other option is to place the house in trust and to then use the trust for financial outgoings for the family, such as school fees and living expenses for both yourself and your sister. Here the house would be rented out and the rents dispersed as appropriate. However, this method should not be used if you intend to sell the house, as then you will incur a big tax charge is you subsequently want to handle the proceeds yourself.