Ireland's dwelling-house exemption can remove Capital Acquisitions Tax from a qualifying inheritance of a home. It is valuable precisely because property values can be substantial. The conditions are detailed, however, and the exemption should never be assumed simply because the beneficiary is a child of the deceased.
For an inheritance under the current rules, Revenue generally requires the property to have been the deceased person's only or main home and the beneficiary to have occupied it as their only or main home for the three years immediately before the inheritance.
Other property interests matter
The beneficiary generally must not own an interest in another dwelling at the date of inheritance. Acquiring an interest in another dwelling from the same deceased person before the valuation date can also affect qualification.
Even a partial interest can require examination. Bring the full property position to an adviser rather than assuming that an inherited share, overseas interest or jointly owned property is too small to matter.
Continued occupation and exceptions
There is generally a requirement to continue occupying the inherited property as the only or main home for six years. Revenue identifies exceptions, including certain circumstances involving age, employment and infirmity.
Other exceptions can affect the deceased person's residence condition or a beneficiary's absence through infirmity. These provisions need to be matched to the facts. One exception does not mean that all the other conditions fall away.
Keep evidence and plan ahead
Retain records showing occupation, property ownership and the circumstances relied on for any exception. If care needs or employment caused an absence, the dates and supporting evidence may be important.
Before selling, moving out or acquiring another interest after claiming the exemption, check whether the action could trigger withdrawal or clawback. A decision that seems reasonable for family purposes can still have tax consequences.
Different conditions apply to lifetime gifts of a dwelling, so do not use the inheritance rules as a shortcut for transferring a house now.
When planning your will, consider what happens if the intended beneficiary does not qualify at death. A tax bill may need to be funded without an immediate sale. Professional advice can test that possibility and help ensure the plan remains workable even if the expected exemption is unavailable.
Sources and further reading
General information, not advice on your individual circumstances. Laws and tax rules can change; check the linked official guidance and obtain professional advice where needed.