Inheritance tax, also known as capital acquisitions tax (CAT), is a tax that is imposed in Ireland on certain gifts and inheritances received by individuals. The tax is applied to the value of the gift or inheritance, and the rate of tax depends on the relationship between the person making the gift or leaving the inheritance and the person receiving it.
In Ireland, inheritance tax is only imposed on gifts and inheritances that exceed a certain threshold, known as the “tax-free threshold.” For gifts and inheritances received from parents, the tax-free threshold is currently €335,000. For gifts and inheritances received from other relatives, the threshold is €32,500.
If the value of the gift or inheritance exceeds the tax-free threshold, the tax rate depends on the relationship between the person making the gift or leaving the inheritance and the person receiving it. For gifts and inheritances received from parents, the tax rate is 33%. For gifts and inheritances received from other relatives, the tax rate is 30%.
In addition to the tax-free threshold and the tax rate, there are a number of other rules and exemptions that apply to inheritance tax in Ireland. For example, there is a relief available for gifts and inheritances that are used for the purpose of maintaining or repairing a dwelling, as well as reliefs for gifts and inheritances that are used for the purpose of paying for education or training.
It is also worth noting that there is no inheritance tax on gifts or inheritances received from a spouse or civil partner.
It is important to note that the rules surrounding inheritance tax in Ireland can be complex, and it is always a good idea to seek advice from a qualified professional if you are unsure about how the tax applies to your specific situation.
Overall, inheritance tax can be a significant consideration when planning for the future, and it is important to be aware of the rules and exemptions that apply in Ireland. With the help of a qualified professional, it is possible to minimise the amount of inheritance tax that is paid and ensure that your gifts and inheritances are passed on as tax efficiently as possible.