Q&A Dominic Coyle
How do lower thresholds affect inheritance tax?
My query relates to the amount a child may inherit from both parents . I gave my two daughters €100,000 each towards buying an apartment in 2007. At that time, the tax threshold was very high – in the region of €450,000.
As the threshold is much lower now, I was wondering has that sum of €100,000 to be included if they were to inherit again? Would the tax threshold that pertained at the time apply to the first sum?
Ms AF, email
Not surprisingly, as recession and austerity bit in the wake of the financial crisis, the Government moved fairly dramatically to reduce this figure (and the related thresholds for categories B & C covering other relationships and none between the person making the gift/inheritance and the recipient).
As of now, the category A threshold stands at €225,000. This threshold is cumulative, in that the beneficiary of a gift or inheritance has to keep track of all the money or value of assets they may have received from someone in each category.
So, yes, the gifts you made to your daughters in 2007 do still count. This means that each of your daughters has just €125,000 left before they reach their threshold.
The fact that, at the time the gift was made, the threshold was higher has no bearing on it, and no, you cannot “freeze” that €100,000 gift at the 2007 threshold level.
In addition to lowering the threshold, the Government has also raised the rate of capital acquisitions tax. Once a person exceeds their threshold, they will have to pay 33 per cent CAT on the balance.
It is worth noting, however, that you can still gift €3,000 a year to each daughter for any number of years, without it being taken into account in assessing their position
vis-a-vis the threshold. This is known as the small gift exemption.
Joint accounts and the savings guarantee
The question of the Deposit Guarantee Scheme has been subject to discussion recently. The guarantee that the first €100,000 of savings in any bank covered by the scheme is protected by the State and also, as I understand it, endorsed by the EU.
Can you confirm that savings in a joint account up to a maximum of €200,000 are also subject to the same guarantees? I ask this as all recent discussions/press comments refer to the maximum of €100,000 without reference to joint holdings .
Mr CF, Dublin
The Deposit Guarantee Scheme is the State underwritten protection offered to depositors in Ireland. Similar schemes operate across the EU. The threshold in the scheme, which used to be in the region of €20,000 was raised to €100,000 shortly after the outbreak of the financial crisis.