Personal finance: Your questions answered

Living apart with no legal separation

Q

My husband and I have two houses in both our names. He lives in one, the so-called principal private residence. I live in the other, which I run as a B&B. We are both over 70. We have no will (could not agree). We have four children who I hope will inherit – two to each house. Will someone have to pay a tax on the houses, which are now worth €400,000 each? Should we be paying the €200 levy on the two houses?

I am worried about the situation as we are not legally separated.

- Ms MR, Dublin

A

I think you need to see a solicitor as a matter of urgency and probably a tax adviser as well. Your core problem is that you are effectively separated but have no legal recognition for this position. In its absence, the law will see you as a married couple, as will the Revenue.

More significantly, you indicate that you and your husband find it difficult to agree on fundamental strategic decisions affecting the family. To my mind, this makes it all the more important that you should have a will – especially as you have four children for whom you wish to provide.

You do not need your husband’s consent or agreement to draw up a will in regard to your own assets. Both properties are in joint names. That means you have the right to bequeath half of each, or their value, to your children.

In the absence of a will, the State will determine where your assets go and, in your case, that would be two-thirds to your husband (assuming he doesn’t pre-decease you) and the remaining one-third between your four children. It sounds like this would not concur with your intentions, so I would see a solicitor soon. Drawing up a simple will is not expensive, although your arrangements might complicate matters.

On the tax side, in the absence of a legal separation, you will be seen as one family unit. That means you are entitled only to one principal private residence. Several issues arise with the other property, whichever it is determined to be. In the first place, as you suspect, it is liable for the €200 annual charge as a non-principal private residence – in effect it is seen as an investment property. More importantly, one home will be liable for capital gains as an investment property when it is eventually sold – and it sounds like it might be yours.

You really should consider the advantages of a legally recognised separation agreement – and this is another issue you should raise with a solicitor. It does not necessarily involve you going into court.

Paying second home charge on only house

Q

My wife and I bought an apartment in Dublin in 2005.

We have since moved to Kilkenny and are currently renting a house there. Our apartment is rented in Dublin. In July, we paid our NPPR tax for the second time.

Is it possible that we are exempt because we only own one property?

- Mr MD, Kilkenny

A

Unfortunately, as long as you are renting your home, you are liable for the non-principal private residence (NPPR) charge – even if it is the only home you own.

This column is a reader service and is not intended to replace professional advice. No personal correspondence will be entered into.

Please send your queries to Dominic Coyle, Q&A, The Irish Times, 24-28 Tara Street, Dublin 2. E-mail: dcoyle@irishtimes.com