On John's death, his nephew Tom inherits his house. John's will stated that his sister, Mary, must inherit a right of residence in the house for her life. Mary was 60 years old when John died.
Value of the benefits
|Market value of house
|Annual value of right of residence
Annual value of house
As Mary will only have this benefit for her life, the value of the market value of a right of residence is multiplied by her age factor.
Market value of benefit received by Mary
|Annual value of the right
|Divided by the annual value of the property
|Multiplied by the market value of the property
||€200,000 x 0.1
|Multiplied by Mary's age factor
||€20,000 x 0.6475
When Tom files his IT38 he can deduct the benefit received by Mary. As Mary just has a right of residence Tom will deduct one-tenth of the market value.