Most people who come to us about inheritance tax in Ireland open with the same question: how do we reduce the bill? It is the obvious place to start, and it is almost always the wrong one.

I spent an hour recently with Mairéad Hennessy recording a podcast episode on exactly this. Mairéad Hennessy runs Taxkey, a firm of independent tax consultants working across inheritance and estate tax planning, business succession, property investment and cross-border tax.  

The thing she came back to more than any single relief or threshold was the order in which the decisions get made. Work out what you actually want to happen to each asset, and to each person. Then, and only then, look at what the tax rules allow.

That sounds soft, but is it? Get the order wrong and you end up structuring a family's affairs around a relief that suits the asset but not the family, and you find out fifteen years later that the child who inherited the rental portfolio never wanted to be a landlord.

Start with what is left over, not with the tax

Before anyone can give you useful tax advice, you need your own balance sheet. What assets do you have, roughly what are they worth today, what do you owe, and what does your cash flow look like for the rest of your life?

That last part is the one people skip. Whether wealth passes by lifetime gift or by will, what is actually in play is whatever is left after the parents' own financial security has been paid for. Everything else in this article is downstream of that single number, and it is a financial planning number rather than a tax one.

Once you know it, the questions become concrete. Is there a vulnerable family member who needs particular care? Is there a business, and is there genuinely somebody in the family who wants to run it? Is there a rental portfolio, and would your children actually take on the responsibility that comes with it, not just the income?

As Mairéad put it, in a world with no taxes, what would the plan look like? That is the starting point. The tax rules should not wag the dog.

Why gifting during your lifetime can beat leaving it until the end

The core argument for a lifetime gift is a valuation argument. What you hand over today is presumably worth less than it will be at some unknown point in twenty, thirty or forty years' time. Gift it now and everything it grows by after that grows in your child's name, not in your estate.

That assumption can be wrong, and it should be named as an assumption. Assets fall as well as rise. But over the sort of horizons we are talking about, it holds often enough to be the default question rather than an afterthought.

A lifetime transfer also gives you something an inheritance never can: a date. You choose it, you plan around it, and you can put the surrounding structure in place before it happens rather than hoping it lands well.

The small gift exemption, which almost nobody uses properly

Any person can receive up to €3,000 a year from any other person, entirely free of Capital Acquisitions Tax. It applies to gifts only, never to inheritances, and Revenue confirms it is not counted for aggregation purposes, so it does not touch the lifetime threshold at all.

The figure sounds trivial. Run it out and it stops sounding trivial.

A married couple with four children can move €24,000 a year, tax free, without using a cent of anybody's threshold. That is €240,000 over ten years. Add six grandchildren and the same couple can move €60,000 a year, or €600,000 over ten years. None of it aggregates. None of it is ever taxed.

Two conditions decide whether it works. First, it is a calendar-year exemption and it does not carry forward. Miss 2026 and you cannot make it up with €6,000 in 2027. Second, the money has to be seen to arrive. A bank transfer from the giver's account into an account in the beneficiary's own name is the cleanest evidence there is. Not an account you hold "for" them. If the beneficiary is a minor, the account is in their name and held in trust for them.

Tax in Ireland is self-assessed, which means the onus sits with the taxpayer to demonstrate that a payment came within the exemption. There is a Tax Appeals Commission determination on this point, and it is detailed. A dated bank transfer answers it in one line.

One more thing, and this is the financial planning half rather than the tax half. If you are going to move €3,000 a year to a grandchild for fifteen years, invest it. Money gifted under the exemption and then parked in a deposit account has been given away twice: once to the beneficiary, and once to inflation.

The credit that stops CGT being a dead cost

Here is the piece of the conversation that will be new to most readers, and it is the reason "I won't gift that, it would trigger a CGT bill" is not the end of the discussion.

Where the same event creates a Capital Gains Tax liability for the parent and a Capital Acquisitions Tax liability for the child, the CGT the parent pays can be credited against the child's CAT. Revenue's own guidance sets out the rule and the limit: the CGT credited cannot exceed the CAT payable on the property that is doubly taxed.

Take a parent transferring a rental property to a child who has already used their full €400,000 Group A threshold. Retirement relief and entrepreneur relief are not available on passive rental property, so the parent has a straightforward gain.

• Market value today: €600,000. Base cost: €250,000. Gain: €350,000.

• Parent's CGT at 33%: €115,500.

• Child's gift, after the €3,000 small gift exemption: €597,000. CAT at 33%: €197,010.

• Credit for the parent's CGT: €115,500.

• Child's CAT after the credit: €81,510.

• Total tax across the family: €197,010.

The CGT has not disappeared. It has been paid once instead of twice. Left until death, the same property attracts no CGT, but the child pays CAT of €198,000 on a €600,000 valuation, and rather more if the property is worth €750,000 by then, at which point the bill is €247,500.

The condition to watch is the two-year rule. If the beneficiary disposes of the asset within two years of receiving it, Revenue claws the credit back. That is a long time in the life of a family that may be planning to sell.

Figures are illustrative and rounded, and they assume nothing else has been received from the same group. Anyone modelling their own position needs the real numbers, not these ones.

Where a lifetime transfer needs a ten-year run-up

Business assets are the part of this where planning ahead stops being an improvement and becomes the whole thing.

On the parent's side, a lifetime transfer of a trading business may qualify for CGT retirement relief or entrepreneur relief. Both carry conditions measured over the previous ten years. You cannot decide in March that you would like to retire in June and expect the relief to be sitting there.

Retirement relief also changed with effect from 1 January 2025. For disposals to a child by a parent aged 55 to 69, relief is now restricted above €10m, with the CGT deferred rather than lost. Hold the asset for twelve years and it is abated; dispose of it sooner and the deferred tax comes into charge on the child. For parents aged 70 and over the limit is €3m. On disposals outside the family, the caps are €750,000 up to age 69 and €500,000 from 70.

On the child's side, CAT business relief reduces the taxable value of qualifying business property by 90%. On a business valued at €2m, with the full Group A threshold available, that takes the taxable value to €200,000 and the CAT bill to nil. Without the relief the same transfer produces a CAT bill of €528,000.

Which is exactly why the child has to be in the room for these conversations. The retention conditions land on them, not on the parent. Business relief requires the property to continue to qualify for six years afterwards. And if retirement relief is clawed back because the child sold too soon, it is assessed on the child. A relief nobody explained to the person carrying the condition is a relief waiting to fail.

The family home, and the right of residence

Two routes come up repeatedly for the family home.

The first is the dwelling house exemption, where a child who has lived in the house as their only or main home for the three years before the inheritance, who has no interest in any other dwelling at that date, and who continues to live there for six years afterwards, takes it free of CAT. The conditions are narrow, they are tested at specific dates, and they differ for gifts.

The second is transferring ownership to a child while the parents retain a right of residence. The parents stay living in the house. The value transfers at today's figure rather than tomorrow's. It can be effective, and it is not for everyone, because it is a real transfer of a real asset with real consequences if family circumstances change.

If the family home is the main asset in play, our note on what happens when you inherit a house in Ireland covers the practical side of that decision. For the wider set of options, we have also written about ways to reduce inheritance tax in Ireland, though the thresholds quoted there predate the October 2024 increases.

The US shares sitting quietly in Irish households

There are roughly 250,000 people employed in Ireland by US-domiciled companies, a great many of them holding shares in the employer through options, RSUs or a share purchase plan. Others have simply bought US stocks directly.

US Federal Estate Tax applies to non-US citizens on US-situated assets, and the IRS threshold before a return is required is $60,000. Not €600,000. Sixty thousand dollars. Shares in a US-incorporated company are US-situated property.

There is relief. The Ireland–US convention covers Irish inheritance tax and US federal estate taxes, and Revenue gives credit for tax paid on the US property at the lower of the US or Irish effective rate, capped at the Irish tax paid. Note what it does not cover: the convention does not apply to gift tax, and it does not apply to state death duties.

There is also a genuine advantage on the other side. A beneficiary is treated as acquiring inherited shares at their value at the date of inheritance, so there is a step-up in base cost for CGT. Holding on can be worth real money. You can only hold on, though, if you can pay the tax that arises on inheriting them, which brings the whole thing back to liquidity.

If you think there are US shares in an estate you may inherit, the number of shares and the share price are public information. You can work out roughly where you stand before you ever speak to anybody. We wrote about the US federal estate tax exposure for Irish investors in more detail.

Plan for the rules you have, and expect them to move

Every figure above is a figure for today, and the reliefs move.

Agricultural relief is the live example. Finance Act 2024 tightened the conditions, including extending the active farmer test to the person making the gift, and the government then agreed at Finance Bill stage that the changes would require a ministerial commencement order before taking effect, to allow consultation first. Anyone relying on agricultural relief should confirm where that stands on the day of the transfer rather than assuming.

On the investment side, the Roadmap for the Taxation of Retail Investment was published on 31 August 2026. It confirms an Investment Account available in 2027 for Irish tax-resident adults, one per person, no lock-in, covering listed shares, bonds, ETFs and funds, and excluding derivatives and crypto. The eight-year deemed disposal will not apply inside the account. The annual contribution limit, the tax-free threshold and the flat rate all come with Budget 2027. Exit tax on funds outside the account came down from 41% to 38% in Budget 2026, and the wider review of deemed disposal is signalled for 2028 onwards rather than now.

Mairéad's view, is that the Irish regime for investment taxation has been convoluted to no useful end. The complexity has not delivered value for investors and it is hard to argue it has delivered value for the exchequer either. Simplification is welcome, but the detail is not written yet.

Where to start

Make a will. Then do the cash flow work, so you know what is genuinely surplus to your own security. Then take advice on how to move it, from someone whose job is the tax and someone whose job is the plan, working together rather than in sequence.

The barrier we hear most often is people wondering whether they are "at the level" where tax advice is worth it. That instinct is usually wrong. If there is a business, an investment property, or a portfolio that will have to move at some point, there is a tax event coming whether anyone plans for it. Taxkey offer 30-minute and 60-minute online consultations at taxkey.ie, which is a sensible way to find out what you should be thinking about before committing to anything larger.

The thing worth avoiding is the sentence Mairéad hears most: I would have done this, if only I'd known.

And Mairéad’s book recommendation might be something for you, too: Self Employed – The Forgotten Community by Dan O'Donoghue published in June. It is short, practical, and written for the people who get up every morning and run something without ever asking anyone for help. Worth a read if that sounds like you, and the proceeds go to Kerry Mental Health Association.

I hope this helps.

Paddy Delaney QFA RPA APA