Will inheritance cost me my jobseeker’s allowance?

Q&A: Dominic Coyle answers your personal finance questions

A queue for unemployment benefit outside a social welfare office in Dublin. Photograph: Frank Miller

A queue for unemployment benefit outside a social welfare office in Dublin. Photograph: Frank Miller

 

I am on jobseeker’s allowance and have inherited a house from my dad. Do I need to inform social welfare of this? I am not leaving in the house.

Mr BM, email

The answer to this question depends on the very last sentence of your question. You say “I am not leaving in the house”.

I am not sure whether you mean to say you are not living in the house, or that you are not leaving the house – and depending on which it is, the answer to your question is very different.

If you are not living in the house, then you have two issues. First, you may have an inheritance tax bill if the property is worth more than €310,000.

Even if the property is worth less than €310,000, you may still have an inheritance tax bill. This would happen if other assets left to you by your dad brought the total inheritance above €310,000, or if you previously inherited from your mother and that amount also brings you above the €310,000 threshold.

You could also be in trouble if they had given you a significant gift – worth more than €3,000 – because that, too, would have to be taken into account in seeing if you have received more than the magic €310,000 number.

The second whammy – if you are not living in the property – is that it will certainly be taken into account in your means test and will almost certainly mean that you will lose some or all of your jobseeker’s allowance.

The property would be seen as an investment. In calculating means from investments or savings, the department does nothing with the first €20,000. However, the next €10,000 is assessed as giving you €1 for every €1,000. The following €10,000 (from €30,000 to €40,000) is considered to be delivering €2 per €1,000.

Anything above that figure is seen as giving you weekly income of €4 per €1,000.

So, if your dad’s house was worth, say €295,000, it would be calculated as giving you weekly means of €1,050. That’s nothing on the first €20,000, €10 on the next €10,000, €20 on the next €10,000 and €1,020 on the remaining €255,000.

As jobseeker’s allowance pays you nothing once you are considered to have weekly means of €197.60, the home inherited from your dad would rule you ineligible if you are not living in it.

And yes, you do have to notify the Department of Social Protection of any change in your circumstances. Drawing down welfare to which you are no longer entitled is a criminal offence.

But what if you are living there?

Well that’s a whole different situation – both for inheritance tax and for the jobseeker’s allowance.

On inheritance, if you have been living in the house for the past three years and keep living in it for the next six years, you can avail of something called Dwelling House Relief. That means you will have no inheritance tax bill – as long as you do not own any other property and that this was your dad’s main home when he died. The €310,000 threshold is irrelevant under the relief because, essentially, the property subject to dwelling home relief is removed from any calculation of inheritance.

Of course, if you do own another property, you don’t qualify for the relief.

When it comes to the jobseeker’s allowance, the means test also does not include your own home. So, if you are living in your dad’s house and it is the only property you own, then it should not affect your current jobseeker’s allowance.

And if there is no change in your circumstances affecting the means test, you do not have to say anything to the department. But, beware, if you sell the home, the means test could again be a big issue for you.

As you can see, it does depend on what those words in that last sentence of your question are.

Please send your queries to Dominic Coyle, Q&A, The Irish Times, 24-28 Tara Street, Dublin 2, or by email to dcoyle@irishtimes.com. This column is a reader service and is not intended to replace professional advice

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