For many Irish families, an inheritance from a parent should be a moment of quiet gratitude, not a tax headache. Yet as house prices have climbed, more and more ordinary families are being pulled into the net of Capital Acquisitions Tax (CAT), the formal name for Ireland's inheritance and gift tax. A modest family home in Dublin can now be worth enough to trigger a five or six-figure tax bill for the children who inherit it.
In this guide we explain how CAT works in 2026, what the tax-free thresholds are, the reliefs that can soften or remove the charge, and how to plan ahead so your family is not caught out.
What Is Capital Acquisitions Tax?
Capital Acquisitions Tax is a tax on gifts and inheritances. If someone gives you something valuable while they are alive, that is a gift. If you receive it after they die, that is an inheritance. Both are taxed under the same CAT rules. The person who receives the gift or inheritance is the one who pays the tax, not the person giving it.
The current rate of CAT is 33%. But you do not pay tax on everything you receive. Each person has a tax-free threshold, and you only pay 33% on the value above that threshold. The size of your threshold depends on your relationship to the person you are receiving from.
The Three CAT Thresholds for 2026
There are three lifetime thresholds, known as Group A, Group B, and Group C. They are cumulative, meaning they apply across your whole life, not per year. For 2026 the thresholds are approximately:
- Group A – around €400,000: gifts and inheritances from a parent to a child
- Group B – around €40,000: from a brother, sister, grandparent, aunt, uncle, niece or nephew
- Group C – around €20,000: from anyone else, including friends and cousins
So if you inherit a house worth €500,000 from a parent, you subtract the Group A threshold of around €400,000, leaving €100,000 taxable. At 33%, that is a CAT bill of roughly €33,000. Recent budgets have nudged these thresholds upwards to keep pace with rising property values, but the increases have not fully kept up with the housing market.
The Small Gift Exemption
One of the most useful and most overlooked tools in Irish estate planning is the small gift exemption. Each person can receive up to €3,000 per year from any individual completely free of CAT, and this does not eat into your lifetime threshold at all.
Used cleverly, this adds up. A married couple can each give €3,000 to each of their children every year, which is €6,000 per child per year, tax-free, year after year. Over a couple of decades this can move a substantial sum out of an estate without ever touching the Group A threshold. It is one of the simplest ways to reduce a future inheritance tax bill.
Key Reliefs That Can Cut Your Bill
Beyond the thresholds and the small gift exemption, several reliefs can dramatically reduce or even remove a CAT charge:
- Dwelling House Exemption: if you inherit a home you have lived in for the three years before the death, do not own another property, and continue to live in it, the home can pass to you completely free of CAT. The conditions are strict, so they need careful checking.
- Agricultural Relief: can reduce the taxable value of farmland by up to 90% for qualifying farmers.
- Business Relief: a similar 90% reduction for qualifying business assets passed on to the next generation.
- Spousal exemption: gifts and inheritances between spouses or civil partners are entirely free of CAT.
These reliefs are powerful but technical. Getting the conditions slightly wrong can mean losing the relief entirely, so it is one area where professional advice usually pays for itself.
How CAT Interacts With Capital Gains Tax
It is easy to confuse CAT with Capital Gains Tax (CGT), but they are different taxes. CGT is charged on the gain made when someone sells or gives away an asset that has risen in value. CAT is charged on the value received by the beneficiary. In some lifetime gift situations, the same event can trigger both a CGT bill for the giver and a CAT bill for the receiver, though relief is available so the same value is not effectively taxed twice.
If you are selling shares, a second property, or other assets and want to understand the gains side of the picture, our Capital Gains Tax calculator can give you a quick estimate. And if any of those assets include cryptocurrency, our crypto tax calculator handles the specific rules that apply to digital assets.
Filing and Paying CAT
CAT is self-assessed, which means it is up to you to declare it and pay it. If the total value of gifts and inheritances you have received exceeds 80% of the relevant threshold, you must file a return through Revenue's online system, even if no tax is actually due. The deadline depends on when you received the gift or inheritance, but the key valuation date usually falls in the autumn, with payment due by 31 October.
Missing the deadline leads to interest and surcharges, so it is worth marking the date early. If you also have self-assessed income, our preliminary tax calculator can help you keep all your Revenue deadlines straight in one place.
The Bottom Line
Capital Acquisitions Tax is no longer a tax that only affects the wealthy. With the Group A threshold sitting well below the value of many family homes, ordinary families now face real bills. The good news is that with some forward planning – using the small gift exemption, understanding the dwelling house exemption, and timing gifts sensibly – much of that tax can be reduced or avoided altogether.
Start by understanding the value of the assets involved, use our Capital Gains Tax calculator to model any sales, and speak to a qualified adviser before making large gifts. A little planning today can save your family a great deal of stress and money tomorrow.