Losing out on dwelling house relief

Q&A: Tax implications highlight importance of making a will

The dwelling house exemption can enable someone inheriting a home to avoid  inheritance tax.

The dwelling house exemption can enable someone inheriting a home to avoid inheritance tax.

 

In a piece recently about a row within a family over an inheritance where the son who had minded his mother for many year might lose out, would he not be entitled to the house under the Charlie McCreevy scheme in 2000?

Ms A.C., email

You’re referring to the dwelling house exemption where someone who does not own any property has been living with a relative in their home for at least three years before inheriting, and who lives in the property for a further six years is not subject to inheritance tax.

And you’re quite right. This man could have availed of it . . . had his mother made that provision in the will.

Unfortunately, she didn’t. In fact, she made no will at all, so the whole estate comes under the rules of intestacy. And dealing with a will under intestacy has its own rules, which is what are creating the problem for this family.

The means of resolving this family’s particular circumstances was available but was not availed of. I’ve no doubt that the mother simply assumed her son would continue to live in the home, and that everyone would acquiesce in such a scenario. As it happens they don’t and, even if they did, there were tax implications that would inevitably intrude.

Again, it shows the importance of actively making a will and making provision for your loved ones, according to your wishes.

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

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