How does gift and inheritance tax work?
If you receive a gift or inheritance you may have to pay tax on it. Here’s a closer look at how gifts and inheritance are taxed in Ireland.
What is gift and inheritance tax?
Gift and Inheritance Tax, also known as Capital Acquisitions Tax (CAT), may be due when you receive a gift or inheritance.
This can include money, shares, property and other assets. The amount of tax you must pay depends on the value of the gift or inheritance, your relationship to the person giving it to you and the relevant CAT threshold.
CAT is generally due on the portion of gifts and inheritances that exceeds your tax-free group threshold.
What is the current inheritance tax rate?
CAT is currently set at 33% and has remained at this rate since 2012.
You can check previous capital acquisitions rates online at Revenue.ie.
How much can you inherit before tax?
There are three group thresholds, based on the relationship between the beneficiary and the disponer.
Budget 2027 increased all three thresholds:
| Threshold group | Tax-free threshold | Who it includes | |
|---|---|---|---|
| Group A | €420,000 | A son or daughter of the person giving the gift or inheritance | |
| Group B | €44,000 | Other relatives, including parents, brothers, sisters, nieces and nephews. It also includes other direct descendants, such as grandchildren. | |
| Group C | €22,000 | Everyone else |
These thresholds apply to the total taxable gifts and inheritances you receive within each group.
Lifetime Inheritance Tax Thresholds
You pay inheritance tax based on the total taxable gifts or inheritances you have received within the same group threshold during your lifetime. Previous gifts and inheritances can therefore reduce the amount of your threshold that remains available.
Here’s an example:
If Jane has already received a €22,500 gift from her uncle under Group B, she would have €21,500 of the €44,000 Group B threshold remaining. If she later received a €25,000 inheritance from her sister, €3,500 would exceed her remaining threshold and could be liable to CAT.
What is the disponer and beneficiary?
The disponer is the person who gives you the gift or inheritance. The person who receives the gift or inheritance is known as the beneficiary.
In Ireland, the beneficiary is responsible for paying any CAT due on the gift or inheritance.
What do you have to pay inheritance tax on?
You could have to pay tax on the following:
- Cash
- Property or land
- Stocks and shares
- Jewellery
- A vehicle
You may also have to pay CAT if you are given an interest-free loan or free use of a property for life.
Are there any exemptions?
You don’t need to pay CAT on gifts worth up to €3,000 from any one person in a calendar year - this is called the Small Gift Exemption.
The exemption applies separately to gifts from different people, and these gifts don’t count towards your lifetime CAT group threshold.
As well as the Small Gift Exemption, several types of gifts and inheritances may be exempt from CAT. These include:
You also get a tax-free threshold for gifts and inheritances from certain relatives and other people. You won’t have CAT to pay if the taxable value you receive remains within the relevant threshold.
You can check the full list of exemptions and explanations on the Revenue.ie website.
What are powers of revocation?
This is where someone gives a gift of property but reserves the right to take it back at any time. Generally, CAT isn’t due while that power of revocation remains in place.
However, CAT can become payable if the person giving the gift:
- Gives up the right to take it back
- Passes away and the power of revocation expires
A CAT charge may also arise if you have free use of a property that is subject to a power of revocation.
You can find out more about powers of revocation on the Revenue.ie website.
How and when to pay inheritance tax
If you need to pay Gift or Inheritance Tax, you’ll generally need to file an IT38 return online through myAccount or Revenue Online Service (ROS). In some circumstances, you may be able to file a paper IT38S form.
The deadline for filing and paying CAT depends on the valuation date of your gift or inheritance:
- If it’s between 1 January and 31 August, you must normally pay and file by 31 October that year
- If it’s between 1 September and 31 December, you must normally pay and file by 31 October the following year
You can pay CAT online through Revenue using options including a Single Debit Instruction or credit or debit card. ROS customers may also be able to use a ROS Debit Instruction.
Non-resident customers without a SEPA-reachable bank account can pay by Electronic Funds Transfer.
You can find out more about filing and paying CAT on the Revenue.ie website.
If you’re late paying there could be extra charges to pay and interest added to what you owe.
Gift and inheritance tax FAQs
Are farms exempt from inheritance tax?
No, but farms and other agricultural property can benefit from additional CAT relief depending on your circumstances. If you qualify, any land will be assessed at 10% of its value for CAT purposes which could significantly reduce what you have to pay. You can find out more on the Revenue.ie website.
How does favourite nephew relief work?
Favourite Nephew or Niece Relief allows your niece or nephew to be treated as your “child” for tax purposes. To qualify they must have worked for you for at least 5 years before the gift or inheritance is made. You can find out more about this relief on the Revenue.ie website.
What is a disclaimer of benefit?
This is where you are given a gift or inheritance and choose not to keep it. In these cases CAT isn’t due but the gift or inheritance must be returned. You can find out more about disclaiming on the Revenue.ie website.
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