Married pensioners with one income?

Brendan Burgess

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How do tax bands work for a married pensioner couple?

Let's say that she has no income but his income is

Contributory OAP €25k
Employment pension: €50k
Rental income: €10k
Total :€85k

Is it Married person - one income - €44,300 @20%

If so, shouldn't he transfer the property to her so that the rent becomes her income and it increases the 20% tax band by €10k

If a couple are in their 50s and both have income taxable at 40% , should she be making the pension contributions so that she has more income of her own in retirement?

Brendan
 
Yes if rental property was returned in her name they would pay 54300 @ 20%. Also she would be exempt from usc which he would have paid @4.5%. Therefore they would save €2450.
 
You only get tax relief on pension contributions made from earned income ie from an employment/trade, unearned income (rental income, investment income) is not eligible for pension contribution tax relief
 
Hi Red

I took these figures



€248 + €222 = €470 x 52 = €25k

If he has an employment pension and rental income, they are not relevant to his Contributory OAP.

And if she has no income in her own right, he would get the extra €222?

If she has €10,000 income or €192 per week, would the €222 be reduced by €192 per week?

Brendan
 
I'm not too sure of the calculation for the means test. There's an amount that's ignored, and only the piece above that is counted.

There's another bit to it. My understanding is the increase for qualified adult is actually paid to that adult. So in your original scenario, she would have income of 222 per week.
 
Actually, false alarm. I think it's the first 200 of income per week that's ignored for means testing. So 10,000 would be just under that.
But if the rental income was slightly higher, it would reduce the increase for qualified adult if in her name.

Edit: ignore. Information is incorrect.
 
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First €100 or €200?
Also if they have any savings is her payment reduced euro for euro on her share?
maybe 50/50 with the rent might be best idea.
 
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RedOnion said:
There's another bit to it. My understanding is the increase for qualified adult is actually paid to that adult. So in your original scenario, she would have income of 222 per week.
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The legislation was changed on this in 2013 or 2014. It's counted as part of the main pension since then.
 
If the rental property was transferred into her name she would loose her entitlement to the qualified adult portion of his State pension as she becomes a woman of substance! (not a dependent)
 
Correcting my earlier mistakes:

Putting the rental income of 10k per year (192 per week) would reduce the pension entitlements.
The first 100 per week is ignored, and it's a sliding scale from there until 310 per week at which point there would be no pension increase for qualified adult.

With an income of 192 per week, the rate would reduce from 222.50 to 128.50.

So, putting the rental property into joint names might be the answer, rather than her name solely. 5,000 income for her, with saving of USC, and taxed at 20% instead of 40%. Her income is just below the 100 per week, so would be ignored for pension increase. So they'd save 1,225 per year, without impacting state pension.
 
The dependent portion of the spouse pension is means tested and therefore not based on income alone. It also takes into account savings, investments, property etc.
 
Black Sheep said:
The dependent portion of the spouse pension is means tested and therefore not based on income alone. It also takes into account savings, investments, property etc.
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My understanding is that where the dependent owns property, and that property is rented, it's the rental income that's assessed as means.
Correct me if I'm wrong.
 
If the dependent owns the property, the value of that property is assessed (as if it were cash) against her/him in the means test.
The rental income would also be assessed.
 
@Black Sheep

This is definitely not my comfort area, as I've only had to look at means test twice ever.

I know the Increase for qualifies adult means test is a little different to others. Can you explain which part of the following I've misunderstood?

"If you are claiming an increase for a qualified adult with your social insurance payment and if your spouse, civil partner or cohabitant owns property (in their own right or jointly with you) rental income from this property will be assessed for payment of an Increase for a Qualified Adult . This rental income is assessed as cash in the means test and the capital value of the property is not assessed. However, the capital value will be assessed in the normal way if the property is not rented – see ‘Capital value’ above."

Capital and social welfare payments

Capital for Irish social welfare purposes includes property, savings and investments. Find out how to assess income from capital for social welfare payments.
www.citizensinformation.ie
 
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