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How do you calculate inheritance or gift tax ?

How do you calculate inheritance or gift tax ?

How do you calculate inheritance or gift tax (aka CAT or capital acquisitions tax) ?

The amount of CAT you pay on a gift or inheritance depends on:

  1. its value
  2. your relationship to the person who gave it to you
  3. whether you have received other gifts or inheritances.

You do not have to pay tax on a gift or inheritance if:

  1. its value is below the group threshold and
  2. aggregation rules do not apply.

The threshold you use depends on your relationship to the person who gave you the gift or inheritance.

To calculate how much CAT you have to pay, you need to know your correct group threshold and rate of tax. These are determined by the date of the gift or the date of the inheritance. You will also need to know the value of the benefit you received on the valuation date.

You only have to pay tax on the value of a gift or inheritance above the group tax-free threshold amount. You can reduce this taxable amount through relevant reliefs and exemptions.

You must add any previous gifts and inheritances received under the same group threshold for the purposes of calculating CAT.

If the gift or inheritance falls between:

  1. 1 January and 31 August, you must pay by 31 October of that year
  2. 1 September and 31 December, you must pay by 31 October of the following year.

You can pay your CAT online, with a debit card, or by Electronic Funds Transfer.

Any queries on the above give me a call on 091 763817 or email me at oliver@taxreturnhelp.ie

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