As a beneficiary in a will, you only pay inheritance tax if your benefit exceeds a certain amount. This is called the threshold. Any amount below the threshold is tax free. The amount of the threshold will vary depending on your relationship with the deceased. You will have to pay tax on any inheritance exceeding this threshold. The thresholds and the rates of tax change regularly and the relevant rates are those applicable at the date of death.

Exempt: € all Tax free for Souse or Cohabitant.
Class A: €225,000 Tax free for Child
Class B: €30,150 Tax free for Parent/Brother/Sister/Niece/Nephew/Grandchild
Class C: €15,075 Tax free for all others

Any inheritances over the above thresholds will be taxed at 33%. If you have received prior gifts or inheritances from the same class of donor then these will be added to the current benefit and you are only allowed to use your threshold once.

Child to Parent Exemption

If a parent receives an inheritance from his/her child and takes full and complete ownership of the inheritance, it usually taxable under Group A. But it is exempt if, in the previous five years, the child took an inheritance or gift from either parent and it was not exempt from Capital Acquisitions Tax.

Dwelling House Exemption

A dwelling house and up to I acre of land may be passed to anyone (relative or non-relative) tax free regardless of value if the following conditions are satisfied:

  • Beneficiary must have continuously occupied the property as his or her main residence for three years immediately prior to gift or inheritance;
  • Beneficiary, at the date of the gift or inheritance, beneficially entitled to an interest in any other dwelling house;
  • Must continue to occupy as his or her only/main residence for 6 years after date of gift or inheritance (unless aged >55)
  • House may be sold post gift/inheritance and within 6 years if replaced with another within 1 year;
  • House must not be disponer’s only/main residence (unless the disponer is compelled by old age or infirmity to depend on the services of the donee)

If you receive a gift or inheritance of a house that has been your main residence, it may be exempt from tax if you do not own or have an interest in any other house.

Nothing is certain in life but death and taxes!