Capital Acquisitions Tax

Capital Acquisitions Tax (CAT) is a tax on gifts and inheritances.

You can get a certain amount of gifts and inheritances without paying CAT.

The amount of gifts and inheritances you can get without paying CAT depends on your relationship to the person you get them from. Relationships are grouped into 3 categories with different tax-free limits. Each limit applies to the total of all the gifts and inheritances you get from people in that category.

CAT applies to all property located in Ireland. It also applies if the property is not located in Ireland but the person giving or receiving it is resident or ordinarily resident in Ireland for tax purposes.

There are tax reliefs and exemptions for some types of gift or inheritance. For example, if you get a gift or inheritance from your spouse or civil partner, it is exempt from CAT. There is also an exemption for gifts of up €3,000 a year that you get from the same person. Read more about Capital Acquisitions Tax exemptions and reliefs.

You do not have to pay CAT if the amount you get is below a certain limit. The tax-free amount, or threshold, depends on your relationship to the person who gives you the gift or inheritance.

There are 3 different groups of relationship. The groups are called A, B and C. The limit for each group is for the total amount you got in that category since 5 December 1991.

The current thresholds have applied since 9 October 2019. Revenue has a list of historical thresholds.

Group A

The Group A threshold applies to gifts or inheritances a child gets from their parent. ‘Child’ includes the adult child of a parent. It also includes:

• A stepchild
• An adopted child

Group A applies if you are the child of:

• The person who gives you the benefit or
• Their civil partner

It can also apply if you are a foster child.

If you die and you or your civil partner have a child under the age of 18, the child can get a benefit under Group A from:

• Your parent or
• Your parent's civil partner

Inheritance to a parent from their child

Group A applies when you get an inheritance from your child if you get full ownership of the inheritance. If you inherit a limited interest, or get a gift, then Group B applies.

You may be exempt from CAT on an inheritance from your child if, in the previous 5 years, your child took a gift or inheritance from either parent and it was not exempt from CAT. It does not have to be the same property or of the same value. In this case, no tax needs to be paid even if the inheritance from the child is over the threshold.

Group B

Group B applies if you get a gift or inheritance from someone and you are their:

• Parent and you get a gift or a limited interest. Group A may apply if you get an inheritance.
• Brother or sister (sibling).
• Sibling’s child (or you are the child of their sibling’s civil partner). Favourite nephew or Niece Relief may apply.
• Grandparent or great-grandparent.
• Grandchild or great-grandchild.

If a grandchild is under 18 years of age and takes a gift or inheritance from their grandparent, Group A may apply if the grandchild's parent is deceased.

Group C

Group C applies to any relationship not included in Group A or Group B.

Relations of a deceased spouse

If you get a gift or inheritance from a relation of your deceased spouse or civil partner, you will be assessed with the same group as your spouse or civil partner would have been if they got the benefit from their relation.

For example, if you get a benefit from the father of your spouse or civil partner, the group threshold would be Group C. But if you get a benefit from the father of your spouse or civil partner and your spouse or civil partner is deceased, then the group threshold that applies to you would be the same as for a child who gets a benefit from a parent, Group A.

Passing on a gift

If you get a gift and pass it on to someone else within 3 years, the group threshold that applies to them may be based on their relationship to the person who gave you the gift, rather than on their relationship to you. This is known as gift splitting.

The value of a gift or inheritance for CAT is its market value on the valuation date.

If you have paid costs, liabilities or expenses to get a gift or inheritance, these may be deducted to give the taxable value.

Valuation date

In the case of a gift, the valuation date is usually the date of the gift.

In the case of an inheritance, the valuation date is the earliest of the dates when the inheritance:

• Can be set aside for or given to you
• Is actually set aside for you
• Is transferred or paid over to you

The valuation date is the date of death if:

• Someone gave you a gift in anticipation of their death.
• The giver reserved the right to take back the gift but has not done so.
• The property passes by survivorship. This means that you had a right to the property because of the death of another person who had an interest in it. For example, if you are joint tenants and you inherit the property when the co-owner dies.

Taxable value

The value of your gift or inheritance is the best price you would get for it on the open market on the valuation date.

The taxable value is the market value minus allowable deductions.

You can deduct costs, liabilities and expenses you have paid, including:

• Stamp duty
• Legal costs
• Liabilities and taxes owed by someone leaving an inheritance
• Costs of administering the estate
• Funeral expenses

If you make a payment in return for the gift or inheritance or some other contribution in return for it, this may also be deducted. This is known as a 'consideration' and could be, for example, a part payment, an amount paid annually to the donor or someone else, or a payment of debts of the donor.

If you do not get full ownership but instead get a benefit for a limited period, then there are a number of factors used to calculate the value of a limited interest.

Capital Acquisitions Tax is charged at 33% on gifts or inheritances made on or after 5 December 2012. Previous rates and thresholds are listed on revenue.ie.

The tax rate only applies to amounts over the group threshold.

For example, if you have received gifts from your parents with a taxable value of €550,000, you only pay tax on the amount over the relevant group threshold (Group A: €335,000). So €215,000 is taxed at 33%.

If you get a gift or inheritance, then you are responsible for paying any Capital Acquisitions Tax that is due.

You must make a tax return if the total value of gifts and inheritances you get in one of the groups (A, B or C) since 5 December 1991 is more than 80% of the tax-free threshold for that group.

If you are claiming agricultural relief or business relief you must make a return even if the benefit is less than 80% of the threshold.

In some circumstances, you may be required to submit a tax return if you are the person giving a gift.

Pay and file deadline

If the valuation date is between:

• 1 January and 31 August, you must file your return and pay by 31 October in that year
• 1 September and 31 December, you must file your return and pay by 31 October in the following year

If you pay and file your tax return online using the Revenue Online Service (ROS), the deadline for filing your return is usually slightly later.

Making your tax return for CAT

To make a return online, you must first register for CAT using myAccount. To register, log in, go to ‘Manage my record’ and select ‘Tax registrations’.

Once registered, you can make your tax return online using either:

• myAccount – go to ‘Gifts & Inheritances’ and select ‘File CAT IT38 Return’
• ROS – Select ‘Capital Acquisitions Tax (CAT)’ from the taxes listed

The online CAT return form is called IT38.

Simplified tax return

There is a simplified version of the CAT return form called IT38S that you can use online or on paper.

To use the simplified form:

• You must not be claiming any reliefs, exemptions or credits except for the Small Gift Exemption
• The benefit must not have conditions or restrictions
• The benefit must be from one person only and not part of a larger benefit

To complete the paper form, download Form IT38S (pdf) or order a copy of the form.