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Independent.ie

Wednesday 14 November 2018

Spiralling property prices make death taxes a live issue for more unsuspecting families

Stock photo
Stock photo
A survey commissioned by Irish Life shows that thousands of families are set to be hit with huge tax bills when they inherit homes due to rising property prices. Photo: Stock Image
Charlie Weston

Charlie Weston

Death taxes are set to deliver a bountiful return to the Exchequer this year. But the chances of any changes in the Budget to benefit families look to have been ruled out by Taoiseach Leo Varadkar. This is set to annoy many middle-income people.

A survey commissioned by Irish Life shows that thousands of families are set to be hit with huge tax bills when they inherit homes due to rising property prices.

But the really worrying aspect of this is that half of those surveyed are labouring under the misapprehension that their family home is exempt from inheritance tax.

Revenue figures show the money paid in inheritance tax has doubled since 2010, reflecting sharp rises in the value of homes.

Close to €500m is expected to be paid this year in what is often dubbed 'death taxes', accrued from older parents passing on homes, farms and businesses.

Strong rises in property values have left thousands vulnerable to large tax bills, but many do not realise they will have to pay Revenue when they inherit the homes.

The survey also shows 84pc of people don't know the current inheritance tax rate, which could seriously affect inheritance for their family. Worryingly, less than half of people have made a will. This could mean there is trouble in store for many families.

The Irish Life survey shows one in five of those over the age of 55 expects to leave more than €500,000 in inheritance to their families.

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Half of those surveyed expect to leave more than €100,000, indicating there is a lot of money being passed between family members. The survey was carried out by Coyne Research on 1,000 adults.

The current tax-free allowance for children is €310,000, though the Programme for Government committed ministers to work with the Oireachtas to raise this to €500,000.

But Varadkar has quashed hopes that the tax-free threshold for children will rise in next month's Budget.

He said recently: "The basic principle which I'd like to employ when it comes to inheritance tax is that you should be able to pass on your home, the average-priced home, to your kids without them having to pay capital acquisitions tax.

"But we do have to prioritise. There isn't as much scope for tax reductions in the year ahead as we might like."

It seems not enough people are agitated by the failure of the Government to keep its promises on inheritance tax for it to be an issue.

Families where an inheritance is expected would be well advised to ensure a will is made, and to get financial or legal advice to ensure there is a good plan in place.

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