Minister for Finance Paschal Donohoe has clarified some points around long-term cohabiting couples who are unmarried in regard to inheritance.

In response to a parliamentary question from deputy Noel Grealish on the issues, Minister Donohoe highlighted that married couples or those in a civil partnership were included in a spousal exemption from inheritance or gift tax.

He said that he was “advised by Revenue that it would be very difficult to administer a tax regime for cohabitants which would be the same as that for married couples or civil partners. As you are aware, where a couple is cohabiting, rather than married or in a civil partnership, each partner is treated for tax purposes as a separate and unconnected individual.”

Farming couples and tax reliefs

Essentially what this means for farming couples is that if they aren’t officially married or in a civil partnership, then their long-term partner could have to pay a hefty tax bill if they inherit their partner’s farm upon their death.

If the couple were farming in tandem together, the partner in receipt of the gift or inheritance could qualify for agricultural relief but would still be liable for a tax bill.

However, the minister did point out that there was one tax exemption an unmarried partner could avail of.

The Dwelling House Exemption can be bequeathed free from inheritance tax as long as an individual meets certain criteria.

These include:

  • The house was the only or main home of the person who died (this condition does not apply if you are a dependent relative).
  • You lived in the house as your only or main home for the three years immediately before the date of the inheritance.
  • You do not own or have an interest in another house.
  • You do not acquire an interest in any other house from the same disponer (one who legally transfers his or her own property to another) between the date of the inheritance and the valuation date.
  • The house continues to be your only or main home for six years after the date of the inheritance.
  • *Every tax situation is different and you should always seek independent, professional advice.