Inheritance can be a bittersweet moment. While it often signifies the legacy of a loved one, it can also come with a financial obligation in the form of Inheritance Tax, officially known in Ireland as Capital Acquisitions Tax (CAT).
If you're inheriting property, money, or assets in Ireland, or planning your estate, understanding how inheritance tax works can help you avoid unexpected financial burdens and make informed decisions.
What is Inheritance Tax?
Inheritance Tax in Ireland is levied on the value of assets received by a person as a gift or inheritance. It’s payable by the beneficiary (the person receiving the inheritance), not the estate itself.
The tax is calculated on the total value of all assets received from a disponer (the person giving the gift or inheritance), subject to thresholds and exemptions.
Capital Acquisitions Tax (CAT) rates in 2025
The standard CAT rate is 33%, applied to the amount over the applicable tax-free threshold.
Example:
If you inherit €500,000 from your parent (Group A):
- First €400,000 is tax-free
- Remaining €100,000 taxed at 33%
Tax Payable: €33,000
What assets are taxable under CAT?
You must pay CGT on gains made from the sale, gift or exchange of an asset such as:
Cash & financial assets
- Cash
- Funds from bank, building society, An Post, credit union, or other financial institution accounts
- A credit union account passing under a nomination
Property & real estate
- House or lands
- A limited interest or a right of residence in a property
- The free use of property
Personal & household items
- Household contents
- Paintings
- Jewellery
- Cars
Investments & shares
- Stocks and shares
- Interest-free loans
Trust & joint ownership benefits
- A benefit received out of a discretionary trust
- A further share in jointly held property inherited from another joint owner
Residency rules:
- If the beneficiary (the person receiving the inheritance), is resident in Ireland, they must pay tax on all worldwide inheritances.
- If non-resident, only Irish-situated assets are taxable.
Exemptions and Reliefs
Ireland offers several exemptions and reliefs to reduce or eliminate CAT:
- Spouse or Civil Partner Exemption
Transfers between spouses or civil partners are completely exempt. - Dwelling House Exemption (DHE)
You may qualify if:- The house was your main residence.
- You lived there for 3 of the last 4 years.
- You don’t own or inherit another property.
- You don’t sell the property for 6 years.
- Agricultural and Business Relief
Eligible agricultural or business assets may qualify for a 90% reduction in the value assessed for CAT.
Tax-Free Thresholds (Group Thresholds)
Ireland uses a tiered threshold system based on the relationship between the beneficiary and the disponer:
| Group | Relationship to Disponer | Tax-Free Threshold (2025) |
|---|---|---|
| A | Child (including adopted, stepchild, or foster child in some cases) | €400,000 |
| B | Sibling, niece/nephew, grandchild, parent (in some cases) | €40,000 |
| C | Any other relationship (including unrelated persons) | €20,000 |
If the total value of the inheritance exceeds the threshold, CAT is charged only on the excess.
If you don’t have an inheritance plan in place, the State has one ready and your beneficiaries may face significant financial costs. You’ve worked hard to build what you have; now is the time to secure as much of that as possible.
Tips for estate planning
Estate planning is an important step in ensuring your loved ones are cared for and your wishes are respected. It can feel overwhelming, but taking time now can bring peace of mind later. Here are some considerations to help minimize Capital Acquisitions Tax (CAT) for your heirs while preserving your legacy:
Consider regular, small gifts
Smaller, regular gifts during your lifetime can reduce the taxable amount on your estate while allowing you to see your loved ones benefit. You can gift up to €3,000 per person per year tax-free. This is a simple way to gradually transfer wealth without triggering CAT.
Consider Trusts
Trusts can help manage complex family situations and provide flexibility in how assets are distributed.
Explore lifetime transfers
Transferring assets during your lifetime can reduce the size of your taxable estate and lower future CAT liabilities.
Consult a Tax Advisor or Solicitor
Professional advice ensures your estate plan is tailored to your unique circumstances and complies with Irish tax law.
Look into Section 72 Life Assurance & Section 73 Investment Accounts
These specialized financial products can help cover CAT liabilities and protect your beneficiaries.
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