Couple worried about tax bill from passing on valuable family pub and farm in will
Q My husband and I own a valuable family pub and farm. We’re concerned about the inheritance tax bills which we could leave behind when we pass on the business and farm. In order to limit such bills, what tax reliefs should we be aware of when planning our will? Sarah, Co Kerry
There are four particularly important tax reliefs. The first two apply generally irrespective of whether there is a farm or business or not.
The first tax relief is very simple and important. Any assets left to the spouse of a deceased person are exempt from Irish inheritance tax (also known as Capital Acquisitions Tax or CAT).
The second important tax relief is the tax-free threshold for CAT — which is available to anyone who gets an inheritance.
The amount one can inherit tax-free under the CAT tax-free threshold will depend on the relationship between the parties. For children inheriting or getting gifts from their parents, the amount that can be inherited tax-free is €310,000 over their lifetime.
The Minister for Finance said last year that this figure might increase in future years. For inheritances between other relatives, much less can be inherited tax-free. For example, a sister can only inherit up to €32,500 tax-free from a sibling.
For farmers, a very important relief is agricultural relief. Many conditions apply to this and when they can be met, agricultural property can be valued at 10pc of its real market value for tax purposes.