How can we minimise our inheritance tax bill?
My wife and I are in our mid 70s and our retirement income comes from three rented properties: a commercial office on a long lease to a dentist and two apartments we have let to professionals.
We would like to leave them to our two children when we pass on and wonder if there is anything we can put in place to minimise their tax bill. The total value is about €1.3m.
Your children could be subject to inheritance tax at the rate of 33pc on anything they receive which is worth more than €225,000 each.
Bob Quinn of MoneyAdviser.ie says: "On condition that your children have not inherited or been gifted anything from you in the past, they can each inherit up to €225,000 tax free from your estate.
However this leaves a balance of €850,000 on which your children would need to pay €280,500 inheritance tax on the properties. One way to allow them to retain the properties and pay the tax bill would be for you to take out a Section 72 life insurance policy which would pay out that amount on your death.
It will cost you €1,080 per month to take out such a policy if you are non smokers.
This would allow your children to hold onto the properties until such time as they feel it may be opportune to sell.
Please use an independent broker for this specialist type of insurance, and don't forget your family home and other assets will also form part of your estate.
I'm getting fed up with the constant drop in mortgage interest rates – I'm on a variable rate mortgage and am getting none of the benefits. Would it be worth my while fixing my rate for a while?
There are many thousands who feel your pain. The latest ECB cut brought a reduction of 0.25pc in the base rate, with another expected, possibly before the summer. It means that the gap between those with otherwise similar mortgages is ever widening.
Frank Conway of IrishFinancialReview.com agrees. "Tracker rates are exceptionally low and those that hold them are reaping the financial benefits.
"Standard variable rates have been pushed up by many of the main banks in recent years.
"Others have not passed on some (or any) of the recent ECB rate cuts.
"From a value perspective, switching to a fixed rate of interest will not deliver. In fact, you may see costs rise marginally.
"However, switching does give some peace of mind in the medium term as repayments will not be adjusted upwards (or downwards) during the fixed period. But you should only consider fixing for a reasonable period such as 3 - 5 years. Anything shorter is little more than a super-variable rate (especially 1-year fixed rates).
"Interest rates are generally expected to remain low in the near term as the Euro area recovers economically. However, mortgage lenders in Ireland could continue to increase standard variable rates in order to recover from their losses.
"Fixing a mortgage would be one way of circumventing the actions of the banks".