How do I minimise inheritance tax?

What the Law Says

The Capital Acquisitions Tax (CAT) system in Ireland sets tax-free thresholds depending on your relationship to the donor or deceased. Gifts and inheritances above these thresholds are taxed at 33%, but several exemptions and reliefs help reduce or eliminate the tax liability.

Inheritance tax in Ireland is officially called Capital Acquisitions Tax (CAT). It applies to gifts and inheritances received from someone who dies or gives assets while alive. The amount you can receive tax-free depends on your relationship to the donor — known as 'tax groups'.

Group A applies to children (including adopted and stepchildren), with a current tax-free threshold of €335,000. Group B covers siblings, nieces, nephews, and lineal ancestors/descendants (excluding children), with a threshold of €32,500. Group C is for all other beneficiaries — e.g., friends or cousins — with a threshold of €16,250.

The law allows an annual exemption of €3,000 per donor per year — meaning you can receive up to €3,000 in gifts each year from any person without it counting toward your lifetime tax threshold. Also, gifts made more than 7 years before the donor’s death are fully excluded from CAT calculations.

A key relief is the Dwelling House Exemption: if you inherit a house that was the donor’s only or main residence — and you lived there for at least 3 years before their death and continue to live there for 6 years after — the inheritance may be exempt from CAT entirely, provided you don’t own or have an interest in any other house.

Statutory Text

Capital Acquisitions Tax Consolidation Act 2003 s. 2:

— Capital Acquisitions Tax Consolidation Act 2003, s. 2 — Preliminary

What to Do

Sources