Inheritance Tax Calculator Ireland (CAT)

How Capital Acquisitions Tax Works in Ireland

Capital Acquisitions Tax (CAT) is Ireland's inheritance and gift tax. It applies to the beneficiary — the person receiving the inheritance or gift — not the estate or donor. CAT is charged at a flat rate of 33% on the taxable value of the inheritance or gift above the relevant group threshold. The threshold depends on your relationship to the person giving the benefit. Group A applies to children (including adopted children and certain foster children) and has the highest threshold at 335,000 euro. Group B applies to siblings, nieces, nephews, grandchildren, and parents (in certain circumstances) with a threshold of 32,500 euro. Group C applies to all other relationships with a threshold of 16,250 euro. These thresholds are lifetime cumulative — all gifts and inheritances received from persons within the same group since 5 December 1991 are aggregated.

Understanding the Group Thresholds

The group threshold system means that every gift or inheritance you receive uses up part of your lifetime threshold for that group. For example, if a parent gifts you 100,000 euro today and you later inherit 300,000 euro from the same parent, both amounts fall under Group A and are aggregated. Your total of 400,000 euro exceeds the Group A threshold of 335,000 euro by 65,000 euro, so CAT of 21,450 euro (33% of 65,000 euro) would be payable on the inheritance. It is important to keep records of all gifts and inheritances received throughout your lifetime. The small gift exemption of 3,000 euro per person per year applies separately and does not count towards the group threshold. A parent can give each child 3,000 euro per year tax-free without affecting the Group A threshold.

Dwelling House Exemption

The dwelling house exemption can exempt an inherited property from CAT if certain conditions are met. The beneficiary must have lived in the property as their only or main residence for three years immediately before the date of the inheritance. They must not have an interest in any other residential property at the date of the inheritance. They must continue to own and occupy the property as their main residence for six years after the inheritance (unless they are over 65 or move to a nursing home). The property can be of any value. This exemption is particularly useful for adult children who have been living with an elderly parent in the family home. The conditions are strictly applied and Revenue may claw back the exemption if they are not met.

Agricultural and Business Property Relief

Agricultural relief reduces the market value of agricultural property by 90% for CAT purposes, provided the beneficiary is an active farmer or meets certain farming qualifications. This means a farm worth 1,000,000 euro would be valued at only 100,000 euro for CAT calculation. Business property relief similarly reduces the taxable value of qualifying business assets by 90%. To qualify for agricultural relief, at least 80% of the beneficiary's total assets (after the inheritance) must consist of agricultural property, or the beneficiary must have appropriate farming qualifications and farm the land for at least six years. Both reliefs can be clawed back if the property is sold within six years of the valuation date. These reliefs are critical for keeping family farms and businesses intact across generations.