Inheritance Tax in Ireland

Capital Acquisitions Tax (CAT) is sometimes also known as Inheritance Tax in Ireland.

The current rate of inheritance tax in Ireland in 2020 is 33%.

CAT is a tax charged on money or property that is gifted to, or inherited by, someone. The recipient is responsible for the tax on the gift or inheritance. This is different to the UK where the estate of the deceased is liable for the tax . Some people refer to it as the Gift Tax.

This tax applies to all property that is located in Ireland.

CAT also applies where the property is not located in Ireland but either the person giving the benefit or the person receiving it is resident or ordinarily resident in Ireland for tax purposes.
(More details later on double tax treaties for USA and UK inheritances.)


Inheritance Tax Thresholds:-

Inheritances or gifts under certain thresholds are tax-free.

There are 3 different threshold levels (groups) depending on the relationship between the recipient and the donor (disponer) of the gift or inheritance.

The group A threshold was increased in Budget 2020 – the threshold levels below are valid from October 9th 2019 onwards.

Group A: Tax-free threshold

Group A threshold is  €335,000 , increased from €320,000 in Budget 2020. This applies where the beneficiary is a…

  • child (including an adopted child, stepchild and certain foster children) OR
  • minor child of a deceased child of the disponer (donor).
  • Parents also fall within this threshold where they take an absolute inheritance (full and complete ownership)  from a child.(not a gift) and the inheritance is taken on the death of the child. Otherwise, parents fall into Group B.

Group B: 

The Group B tax-free threshold is €32,500. This applies where the beneficiary is a …

  • brother, sister,
  • nephew, a niece
  • lineal ancestor or lineal descendant of the disponer  (eg grandchild).

Group C :

Group C tax-free threshold is  €16,250 and it applies in all other cases. This includes cousins, great nephews/ great nieces, non relatives.


Inheritance Tax Calculation Examples

Example 1 :  A son inherits a house valued at €415,000 from a parent.
This is €80,000 over the Group A threshold (€335,000). Therefore the tax bill would be 33% of €80,000 which is  €26,400

Example 2 :  Two children inherit a house worth €830,000.
The total inheritance tax threshold for both children is €335,000 times two ( €670,000). With 33% tax on the remaining €160,000 house value, this would result in an inheritance tax bill of €52,800 in total or €26,400 per child.

Example 3 :  A nephew inherits a house worth €200,00. The tax-free threshold (Group B) is just €32,500. The inheritance tax will be 33% of €167,500 – which is €55,275.

Inheritance tax can sometimes result in relatives who inherit property having to sell the property to pay the inheritance tax.


Inheritance Tax Exemptions :

  1. All Gifts or inheritances from a spouse or civil partner are exempt from this tax.
  2. Since 25 December 2016. – you are exempt from inheritance tax (CAT) on a house you inherit – if all of the following apply:
  • the house was the only or main home of the person who died
  • you lived in the house as your main home for the 3 years before the person’s death.
  •  you do not own, have an interest or a share in any other house, including one you acquired as part of the same inheritance
  • the house remains your main home for six years after you receive the inheritance. (This does not apply if you are over 65.) More details here

3. Parents taking an absolute inheritance  (full ownership ) from a child have a Group A threshold. However, if the child took a non-exempt gift or inheritance from either parent in the previous five years, any inheritance taken by a parent from that child is exempt.

  • Example : Philip receives a gift of £10,000 from his mother in 1999. Philip dies in 2002 and leaves his entire estate of £1,000,000 to his father. The inheritance taken by the father is exempt.

Payment of CAT:

If you receive a gift or inheritance, then you are responsible for paying any Capital Acquisitions Tax.
However, If you are not resident in Ireland, you must get an agent who is resident in Ireland, such as a solicitor, to take responsibility for the payment of CAT.

All gifts and inheritances with a valuation date in the 12-month period ending on the 31 August must be paid and filed by 31st October of that year.

That means that if you inherit between January and August, you have to pay by October 31st the same year. If you inherit between September and December, you won’t have to pay the inheritance tax bill until 31st August the following year.

Late filing or payment:

If you don’t file a tax return and pay the tax by Oct 31 there is a late filing charge . This is 5% if you delay 2 months or less and 10% after that.
Late payment interest charges of 0.0219% per day will also apply , (equivalent to 8% a year)


Lifetime Thresholds:

You pay CAT on the total of all the gifts or inheritances that you have received throughout your lifetime.
To calculate the CAT on the latest benefit or inheritance, you need to add all inheritances or gifts received under the same group threshold from 5 December 1991.
So for example -a nephew receives a €22,500 inheritance in 2002. They have €10,000 of their €32,500 threshold left.
If the same nephew gets a €20,000 inheritance from another uncle in 2020 – the “left over” €10,000 from the first inheritance will apply. The tax will only be charged on €10,000 of the €20,000.
More details here


Exchanging Money

If you have inherited money in another country  – you will probably need to exchange that money into Euros.
Conversely, if you have inherited money in Ireland and you live elsewhere you may also need to convert it to your home currency.

You should take a look at our page on Where to get the Best Exchange Rates


Inheriting Property Abroad

You sometimes may have to pay inheritance tax (CAT) in Ireland and in another country on the same event.  Where countries have different taxation rules, the same gift or inheritance may become subject to tax in more than one country.

In Ireland you can claim a credit against CAT if you have paid tax on foreign property. This is subject to conditions. Ireland has treaties with several countries, including the United Kingdom (UK) and the United States of America.

  • Irish Inheritance Tax on USA Property

An agreement between Ireland and the USA covers Inheritance Tax  . Ireland can only charge tax on property that is located abroad if the person giving the inheritance is either:

  • domiciled in Ireland OR
  • not resident in the USA.

If an Irish resident inherits property located outside Ireland from a USA resident, there will be NO liability for inheritance tax in Ireland. The USA will have charged federal estate tax on the property. Revenue do not need to be informed.


  • Irish Inheritance Tax on UK Property

UK property is a bit more complicated – so you may well need to involve a solicitor or tax specialist.
There is a treaty between Ireland and the UK that covers CAT in Ireland and Inheritance Tax in the UK.

The main points of the treaty are as follows:

  • Ireland will give credit for any inheritance tax paid on the UK property
  • The credit given cannot be greater than the Irish tax due.
  • The person who paid the double tax will receive the credit.
  • If you received UK property, you can receive a credit if you paid UK tax on that property

Complications can arise because in the UK the estate is liable for the tax , whereas in Ireland the beneficiary is responsible for tax. The result is that different people may be liable for the taxes in the two countries.

Any UK tax paid will have to be converted to euros at the rate of exchange at the date of payment.
The estate value will also have to be converted at the valuation date (per Irish CAT legislation) at the applicable rate of exchange.

The credit is given to the person liable to the UK tax after all other costs have been paid . (That is normally the person who inherits an estate).
This person, who is called the residuary legatee , must also be liable to Irish CAT to claim the credit. If he/she pays no Irish CAT, the credit is lost.

More details here


More information on Inheritance tax is available from

National CAT Information Unit
City Centre/North City PAYE District
Central Revenue Information Office
Cathedral Street
Dublin 1
D01 DC77

Telephone opening hours: 10.00 to 12.30 Monday to Friday
Call  – 1890 201 104


UK Inheritance Tax (Figures from 6/4/19)

In the UK the tax is charged on the estate , not on the recipients.
The rate of inheritance tax in the UK is 40% on anything above a £325,000 threshold.
But – the threshold doubles to £650,000 for a married couple – as long as the first person to die leaves their entire estate to their partner.

If someone owns a home – their tax-free threshold can increase to £475,000 if:

  • the home is passed on to children (including adopted, foster or stepchildren) or grandchildren,
  • the total estate is worth less than £2 million

(This is doubled to £950,000 for a married couple – as long as the first person to die leaves their entire estate to their partner)

So an example : – someone in the UK passing on a property worth £830,000 to two children. (The deceased parent is the second parent to die and the first parent to die left their entire estate to their spouse)
The total inheritance tax threshold is  £950,000 – so there is no inheritance tax bill.

A similar situation in Ireland (see above)  on an €830,000 house – would result in an inheritance tax bill of €52,800 in total, or €26,400  per child.

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15 thoughts on “Inheritance Tax in Ireland

  1. 33% on anything over €32,500.
    So- if the house was valued at €232,500 – tax would be charged on 200,00 at 33% . This would be €66,000 .

  2. I think Revenue need to answer your question.
    But – maybe it should be entered in Part 7 line 13 ?

  3. I am 68 and my sister is 70. Both of us live in the family home since we were children. Have no other property. If one of us died does the other pay property tax on sister share of the house?

  4. Single people who work all their lives, who dont get the tax breaks couples get, buy their own home – then their siblings, nieces / nephews are fleeced with INHERITANCE TAX !!!

  5. Is an adult with special needs entitled to a tax exemption if she inherits the family home from her grandmother where she has lived all her life. She has no parents and this is her family home

  6. An individual has inherited a farm from her parent. She has lived her whole life with the parent, in the parent’s home, on the farm. Will the individual be liable for inheritance tax on the farm and house if it is over the threshold?

  7. Our aunt resided in UK died last year. She had a property in Mayo, 2nd cousins have somehow or other have been left this property. My Sister and myself have now been told we have to pay tax on this property. Why are we responsible for this. Also the land is mainly forest type land not arable, surely this must affect the tax threshold.

  8. My husband has been left 20,000 in a will and needs to pay inheritance tax , the solicitor wants to pay this by 31st oct 19 but husband wont receive the money until end of December is this right?
    Thanks in advance,
    Antoinette

  9. Hi,

    My great uncle (my mother’s uncle) left me money. What group is this for inheritance tax purposes?

    Thanks

    • Hi Faith – it will fall under Category C. The article has now been updated to clarify this.

      Thanks

  10. Hi
    I have two daughters one living in USA 21 years and the other in Canada 8 years. They have been left an inheritance by an uncle by marriage (their dads sister’s husband). Can they use their social security numbers from the country they live in or do they have to use their Irish numbers? Neither of them have paid tax in Ireland for the numbers of years left.
    Many thanks.

    • Special rules apply in order to ensure that non-resident beneficiaries make returns and pay their tax. Where the Personal Representative or Executor of the Estate is Irish resident, then that person is obliged to ensure that the Non-Resident Beneficiary discharges the tax

      Where there is no Irish resident Personal Representative, the Personal Representatives must appoint a solicitor holding a practising certificate in the State, as agent, prior to seeking Probate or Letters of Administration.

      Your daughters will need to use their Irish PPS numbers.

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