Inheritance Tax Ireland – Rates & Exemptions

Inheritance tax in Ireland catches more families off guard than almost any other tax. It is not that people do not know it exists, but that they do not realise how quickly rising property values can push an estate over the tax-free threshold, that gifts received decades ago can reduce the exemption available today, or that a 33% tax bill on an inherited family home can force a sale just to pay Revenue.

What Is Inheritance Tax in Ireland?

In Ireland, inheritance tax is officially known as Capital Acquisitions Tax (CAT). It is a tax charged on gifts and inheritances received above certain tax-free thresholds. Unlike in the UK where the deceased person’s estate pays the tax before assets are distributed, in Ireland it is the recipient who is liable. CAT applies to inheritances received on death and gifts received during a person’s lifetime. Revenue treats gifts and inheritances as accumulating together against your lifetime threshold.

What Is the CAT Rate in 2026?

The rate of Capital Acquisitions Tax in 2026 is a flat 33% on the value of a gift or inheritance that exceeds the relevant tax-free threshold. To put that simply: if you inherit €500,000 from a parent and your tax-free threshold is €400,000, you owe 33% of €100,000 which is €33,000.

Inheritance Tax Thresholds Ireland 2026

The tax-free threshold depends on your relationship with the person giving you the gift or inheritance.
• Group A: €400,000: applies where the beneficiary is a child of the deceased, including adopted children and stepchildren.
• Group B: €40,000: applies to siblings, nieces, nephews, grandchildren in most cases, and grandparents.
• Group C: €20,000: applies to everyone else: cousins, friends, unmarried partners, colleagues. The threshold is low enough that even relatively modest inheritances can trigger a tax bill.

Your threshold is not per inheritance it is a lifetime cumulative limit. All gifts and inheritances received from people in the same group since 5 December 1991 count toward the same threshold. This is one of the most overlooked aspects of Irish inheritance tax.

What Property Does CAT Apply To?

CAT applies broadly to all property received, including cash, residential and commercial property, shares, investments, business assets, and foreign property in certain circumstances. Irish assets are always taxable regardless of where either party lives. CAT also applies to foreign assets if either party is Irish resident or ordinarily resident for tax purposes . This catches many people who assume that inheriting from abroad is automatically outside the scope of Irish tax. Ireland has double taxation agreements with the United States and the United Kingdom which can reduce or eliminate double taxation on the same inheritance.

Key Exemptions from Irish Inheritance Tax

Spouse and Civil Partner Exemption

Transfers between spouses or civil partners are fully exempt from CAT with no threshold and no limit. However, this does not make the problem disappear — it defers it. When the surviving spouse eventually dies, the estate passes to children or others who will then face their own CAT liability on what may by then be a higher-value estate.

Small Gift Exemption — €3,000 Per Year

Every person can receive up to €3,000 per year, per donor, completely tax-free. This exemption does not count toward the recipient’s lifetime CAT threshold. A couple can give a child €6,000 per year between them. Over 10 or 20 years, this can transfer meaningful wealth tax-efficiently but it requires forward planning and consistent action.

Dwelling House Exemption

The Dwelling House Exemption allows a person to inherit a residential property completely free of CAT regardless of its value, provided strict conditions are met: the beneficiary must have lived in the property as their main residence for at least three years immediately before the inheritance; must not own any other residential property at the time; and must continue to live there for six years afterward. Given that many properties in Dublin and other cities are now worth well above €400,000, this is a critical planning tool for families whose primary asset is the family home.

Agricultural Relief

Agricultural Relief reduces the taxable value of qualifying agricultural property by 90% for CAT purposes a farm worth €1,000,000 is taxed as if it were worth €100,000. To qualify, at least 80% of the beneficiary’s total assets must consist of agricultural property after the inheritance, and the disponer must have been an active farmer for at least six years prior to the transfer.

Business Relief

Business Relief mirrors Agricultural Relief, reducing the taxable value of qualifying business assets by 90%. It applies to business assets, shares in qualifying trading companies, and interests in business partnerships. The business must be a genuine trading business, not primarily an investment holding company.

Favourite Nephew or Niece Relief

A niece or nephew who has worked full-time in a business owned by their aunt or uncle for at least five years may be treated as a Group A beneficiary rather than Group B, increasing their effective tax-free threshold from €40,000 to €400,000.

How Is CAT Calculated? A Practical Example

A parent dies in 2026 leaving their home valued at €550,000 to their child. The child previously received a gift of €100,000 from the same parent in 2018.

• Cumulative amount from Group A: €650,000
• Group A threshold: €400,000.
• Taxable amount: €250,000
• CAT at 33%: €82,500

Now apply the Dwelling House Exemption: if the child lived with the parent for three years prior to death and owns no other property, the €550,000 home is fully exempt. Only the previous €100,000 gift counts toward the threshold — which is below the €400,000 limit, leaving no CAT liability at all. The same estate can result in either an €82,500 tax bill or zero liability depending on the circumstances.

When Does CAT Need to Be Filed and Paid?

CAT returns must be filed and tax paid by 31 October in the year following the valuation date of the inheritance or gift. Filing late results in interest charges and surcharges. Returns are filed using Revenue’s Form IT38 through my Account on Revenue.ie.

Planning to Reduce Your CAT Liability

With property values continuing to rise, more Irish estates are breaching the threshold than ever before. Key planning strategies include making consistent use of the €3,000 annual small gift exemption; taking out a Section 72 life insurance policy specifically designed to cover an anticipated CAT bill so beneficiaries do not need to sell inherited assets; structuring wills with professional tax and legal advice to ensure exemptions are correctly claimed; and spreading gifts across multiple beneficiaries, each with their own threshold.

The Bottom Line

Inheritance tax in Ireland is a 33% flat rate applied above lifetime thresholds of €400,000 for children, €40,000 for siblings and certain relatives, and €20,000 for everyone else. Given Ireland’s property values, a growing number of ordinary families are facing unexpected CAT bills not because they are wealthy, but because the family home has appreciated far beyond what the threshold anticipated. Understanding the reliefs available and planning with professional advice is the most effective way to ensure your family keeps as much as possible of what you have worked to build.