Inheriting a Property in Ireland: Probate and Tax

Inheriting a house in Ireland usually involves two things: probate (the legal process of administering the estate) and inheritance tax, which in Ireland is Capital Acquisitions Tax (CAT) at 33% above your tax-free threshold. A child can inherit up to €400,000 from parents over a lifetime before CAT applies. Separately, the dwelling house exemption can make an inherited home completely tax-free if you actually lived in it and meet the conditions.

Inheriting property is rarely simple, emotionally or administratively. Here is the practical shape of it: getting legal title through probate, and the tax that may follow.

Probate: getting legal title

Before an inherited property can be sold or transferred, the estate normally goes through probate, the court process that confirms who can deal with the deceased's assets: - If there is a will, the executor applies for a Grant of Probate. - If there is no will, a close relative applies for Letters of Administration, and the estate is shared under the rules of intestacy.

The valuation date for inheritance tax is generally the date of the grant. Probate commonly takes several months, and the estate's Statement of Affairs (Form SA.2) is filed with Revenue as part of the process. A solicitor usually handles probate.

Inheritance tax (CAT)

Inheritances are subject to Capital Acquisitions Tax at 33% above a tax-free threshold that depends on your relationship to the person who died: - Group A (child inheriting from a parent): €400,000 over a lifetime. This is a running total of gifts and inheritances within the group. - Other relationships have much lower thresholds.

You file a CAT return (Form IT38) once your total benefits in a group exceed 80% of the threshold. See the gifted-deposit-and-CAT guide for how thresholds and the small gift exemption work.

The dwelling house exemption (can be a full exemption)

If you inherit a home you were genuinely living in, the dwelling house exemption can remove CAT entirely. The main conditions are: - the house was the deceased's only or main home at the date of death; - you lived in it as your only or main home for the 3 years immediately before the inheritance; - you do not own or have an interest in any other house at the date of the inheritance; and - you keep it as your only or main home for 6 years after (with exceptions).

The residency conditions are relaxed if you are aged 65 or over, or required to live elsewhere for work or because of certified infirmity. This exemption is valuable but strict, so check the detail with Revenue or a solicitor.

If you sell an inherited property

For Capital Gains Tax, you are generally treated as acquiring the property at its market value on the date of death, so there is no CGT on the increase in value up to that point. If you later sell for more than that value, CGT at 33% can apply to the further gain (the dwelling house exemption is a CAT relief and does not change this). See the Capital Gains Tax guide.

This guide is general information, not legal or tax advice. Probate and CAT get technical quickly, and thresholds and reliefs change, so confirm the current position with a solicitor and Revenue.