Hi Martin,
Many thanks for your reply. All your questions are easily answered except how long do I expect to live??
Nationality Irish, live here 9 months of the year, work here part time. Children 43,37,34, all living and working here in Ireland.
No assets apart from family dwelling home value at approx. €750,000. Shares,cash investments etc. value €130,000. Now 65 yrs healthy and busy life, husband now 74. Do not want to pay rent to offspring. Ideally would like to leave apartment to middle child.
Would really appreciate your reply. thanks Browtal.
I emphasize that I'm no expert.
You do need expert advice with such a tidy sum involved.
The way I read it is:
It's almost certain you'll all be covered mostly under Irish tax law. As you are resident and normally resident in Ireland but you have a permanent residence in both countries, determination of the tax liability falls on other criteria. Your centre of vital interests is Ireland (as your family live there) + your habitual abode (9 months per year) = Ireland + nationality = Irish, same for your kids, so that looks pretty clear cut to me.
See[broken link removed] Article 4 section 2.
The house in Spain will probably fall under Spanish inheritance tax. Any inheritance tax paid in Spain could be offset against Irish liability for inheritance tax. But obviously it's better to pay none at all anywhere.
It's certainly generally better to have a Spanish will to explicitly cover the Spanish property as well as an Irish will. I've been through a probate and acted as an executor myself and I really appreciated that my folks had everything well organised to make it as easy as possible. Having a recognized Spanish will could potentially save on a lot of hassle of official translations and stamps from embassies. A concise list of assets, bank accounts, postal addresses etc. is also a great help.
see
http://www.marbella-lawyers.com/articles/showArticle/spanish-inheritance-tax-spain-iht
You'd definitely better watch out. You may not think you're rich. But your children may fall above the threshold for inheritance tax in Ireland or Spain or both depending on how you split things up.
The main family house in Ireland is apparently only exempt if the recipient does not have any interests in another property: and you already have 2 properties.
see [broken link removed]
b) The recipient must not, at the date of the gift/inheritance, be beneficially entitled to any other dwelling- house or to any interest in any other dwelling- house
http://www.revenue.ie/en/tax/cat/leaflets/cat2.html
So you should probably be looking at your Irish house too, not just the Spanish one. And how you split these assets between your 3 children.
If you do the split correctly, your children may all be able to avoid inheritance tax completely in both countries without too much effort... e.g. split both houses three ways so that all 3 of them can maximize their personal tax allowances in both Spain AND Ireland. And then have them agree to "resell" shares to each other afterwards if only one of them really wants that house in Spain. Rather than just willing the house in Spain directly to the middle child individually. That second transaction might also incur some property transfer tax, which might be cheaper than inheritance tax, or they could just carry on owning things three ways.
You could also look at taking out a mortgage on the property so that the amount outstanding on the mortgage is in Ireland. Of course you're then going to have to pay interest on the mortgage, so that might not work out to be very practicable or cheaply either.
Otherwise one of your children could be forced to sell one of the houses to pay off the 20% liability on the excess above 521K in Ireland or 15% in Spain. And no one would want that.
Last, but not least, you could just relax and tell your kids that inheritance tax is paid by the recipient, not the estate, so it's their issue to sort out.
So I'd be seeking proper advice to manage / understand this risk properly.