Dwelling home exemption is a very valuable relief but it works quite differently depending on whether you are getting property as a gift or in a will
How best to ensure your sister-in-law can continue to live in your husband's house can be a more complicated issue than you would expect. Photograph: iStockMy husband owns a small house apart from the one we live in – ie, his main place of residence. His sister has lived in this other house for more than 20 years and my husband will leave this house to his sister in his will.We read somewhere that the “disponer” does not need to be living in the house with the “recipient” .
Will my sister-in-law be liable for inheritance tax on receipt of this property in the future? Can my husband bequeath this house to his sister now – ie, during his lifetime? Would he be liable to pay gift tax if he did so? Would his sister be liable for inheritance tax in this instance? What we are dealing with here are the rules around the dwelling home exemption, one of the more valuable inheritance tax breaks in the Irish system.
This €40,000 is the new tax-free threshold under category B inheritances – which includes inheritances taken by a sister or brother. I know you say this is a small house but it is still likely to be worth significantly more than that. And, of course, any other gifts over the value of €3,000 or inheritances that your sister-in-law may have received from her grandparents, great-grandparents, uncles, aunts or other siblings may already have eaten away at much of that tax-free threshold.
But you can also meet the criteria if you are over the age of 65 when you receive the gift and, at 76, your sister-in-law certainly meets this eligibility requirement.
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