As a widower is there any way I can pay less local property tax?
Q: I am 74, and a widower and I pay the full local property tax on my house in Bray, Co Wicklow, which I bought with my wife when we moved here in 1965. I live on a small private pension, and it is a big bill to pay each year. Are there any conditions that allow for widowed people to pay a lower amount of tax, given that they bought the house as a couple, but now have to maintain the property on a sole income/pension?
A: The law states that any property used for residential purposes on the valuation date of May 1, 2013 is liable for local property tax (LPT).
As the owner of a liable property on the liability date, you are liable to pay, according to Eileen Devereux, Commercial Director, Taxback.com.
Unfortunately, there are no deductions in LPT available for widowers. But there is the option to defer payment if you are struggling. Full or partial deferring for a period of time can help as a short-term measure until financial circumstances improve, or until you sell the property, if that is an option you consider at some point.
To qualify for a deferral you must be an owner occupier and your gross annual income from all sources must not exceed certain amounts.
As a widower, the deferral will remain in place until the next valuation date (currently November 1, 2019) and your income is not considered until then, according to Ms Devereux.
On November 1, 2019, you can make a claim for deferral of the tax. If you satisfy the conditions, you will qualify. If you do not qualify, the amount that was deferred up to the end of 2019 may continue to be deferred. Interest at 4pc a year will continue to be charged on the deferred amount.
Q: My husband and I had our second child three months ago, and I've decided to take a break from work to mind the children. My husband has life cover through work, but I am wondering if that's enough? Should I have any extra cover even though I am not working?
A: It is so easy to underestimate the cost of being a stay-at-home parent, and most people do.
But stay-at-home parents make a huge hidden financial contribution to their family, says director of KM Financial Mike Knightson. Leading life insurers Royal London recently undertook a cost-analysis of 11 major roles that the typical stay-at-home parent would perform, for example, cooking, cleaning, driving etc. It found that it would cost in the region of €42,000 a year to pay someone to come in and do this work.
Mr Knightson recommends that you discuss life cover options with a broker to assess what would be a suitable level of cover to provide a safeguard for your family in the event of an untimely death.
Q: Our Irish-born son is married to an American and living in the US as a legal permanent resident. As their first baby is due in 2019 we would like to give them a substantial sum as part of his inheritance. As a beneficiary from an Irish donor, what are the tax implications for him under US tax laws and what documentation needs to be completed to be tax-compliant?
A: In the US you can receive up to $14,000 a year tax-free, and a married couple can receive twice this amount without having to file a US tax return.
Depending on the family's circumstances, this might be an option, according to Susan Murphy of MakeMyWill.ie.
If it is a more substantial amount you wish to gift, perhaps the most straightforward approach would be to gift him the money into his Irish account, so he can receive the Irish capital acquisitions tax (CAT) threshold of up to €320,000 before he is liable for tax, and file the Irish self-assessment tax return before the end of October.
He can also claim the annual small gift exemption of €3,000 on the tax return. Anything above this would be taxed at 33pc, Ms Murphy said.
Then he can transfer over to the US from his own Irish account as and when he wants it.
However, this gift will be taken into account on a later inheritance, and she must bear this in mind.
His wife can also receive a gift of up to €16,250, plus the annual small gift exemption of €3,000.
And her grandchild can receive up to €32,500, plus the annual small gift exemption of €3,000. There should not be any double-taxation. If the amount is more than the CAT threshold, it would be best to have a chat with an accountant about the most tax-efficient way to transfer the gift.
Ms Murphy says it would best to contact the helpline of the IRS (Internal Revenue Service) in the US and seek their confirmation, preferably in writing, before anything is transferred over to the US.
There is an option to defer payment of the property tax if you are struggling financially, which could help you in the short-term
It it would cost in the region of €42,000 a year to pay someone to come in and do this work of a stay-at-home parent, research has found.