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IMPORTANT INFO FOR COHABITING COUPLES

by Carmel Green 15/01/2025

Let’s talk about cohabiting couples, also known as “living with your other half without the shiny rings and legal paperwork.” It might not sound romantic (and definitely not sexy), but it’s a reality for so many people today.

Gone are the days of your mammy clutching her pearls and muttering “living in sin” with disapproval. These days, a lot of couples are skipping the expensive weddings and opting for mortgages instead—or just skipping both and enjoying a few extra holidays.

But while unwedded bliss might suit you just fine, there are a few less fun realities to keep in mind—like taxes. Yes, the romance killer itself. Let’s dive in (and add a sprinkle of humor to keep this from being completely grim).

The Tax Man Doesn’t Love Your Love

Here’s the biggie: cohabiting couples don’t have the same legal rights or tax benefits as married couples or civil partners in Ireland. Revenue treats you like two single people sharing a houseplant and a Netflix account. Romantic, right?

This means if one of you pops your clogs (sorry for the bluntness), the survivor may face a serious Inheritance Tax bill.

Inheritance Tax: The Grim Numbers

Let’s say one of you inherits the family home. As an unmarried partner, the most you can inherit tax-free is €16,250. Anything over that gets hit with a 33% tax bill.

Here’s an example (brace yourself):

  • Ann and Barry buy a house worth €350,000, with a €200,000 mortgage.
  • Sadly, Barry passes away, and the mortgage is cleared by their Mortgage Protection policy.
  • Revenue decides Ann inherited half the house’s value, which is €175,000.
  • Tax-free threshold: €16,250.
  • Inheritance Tax bill: €52,387.
  • Ann would need to sell the house or rob a bank (we don’t condone or advise this course of action ) to cover the tax.

How Can You Avoid a Financial Nightmare?

Yes, Inheritance Tax is a pain. But there are ways to reduce the burden:

  1. Seek Professional Advice Sit down with a solicitor or tax advisor who knows the ropes. They’ll help you plan for the worst-case scenario without losing your shirt.
  2. Get Your Cover Right While you can’t escape the tax rules, you can make sure your Mortgage Protection and life insurance are working as hard as you are.
  3. Life of Another is a good fit for this
  4. A good policy can provide much-needed financial security for your family.

Make a Plan Now, Thank Me Later

If this all sounds a bit overwhelming, don’t worry—you don’t have to tackle it alone. I can help you figure out what cover you need to protect your family and keep the taxman at bay.

Take the first step