Inheriting and then selling a property creates two separate tax events in Ireland. Many people assume that paying inheritance tax on a property settles the tax position permanently. It does not. Capital Gains Tax applies separately to the gain made between the value of the property at the date of death and the price received on sale. Understanding how the cost base is set, and how the CAT/CGT offset credit works to prevent outright double taxation, is essential before the sale completes.
How the CGT Cost Base Is Set for an Inherited Property
When you inherit a property, your CGT base cost is the market value at the date of death, not what the deceased originally paid for it. This is the probate value, and it is the same figure used for Capital Acquisitions Tax purposes. A property purchased in 1998 for 90,000 euro and valued at 430,000 euro at the date of death comes into your hands with a CGT base cost of 430,000 euro. Any future gain is measured from that figure. Full detail on how capital gains tax ireland is calculated and paid is covered on our site.
Calculating the CGT Gain on Sale
| Item | Example Figures |
|---|---|
| Sale price | 540,000 euro |
| Less: CGT base cost (probate value) | 430,000 euro |
| Less: Legal and estate agent fees on sale | 9,500 euro |
| Less: Enhancement expenditure since inheritance | 8,000 euro |
| Chargeable gain before annual exemption | 92,500 euro |
| Less: Annual CGT exemption | 1,270 euro |
| Net chargeable gain | 91,230 euro |
| CGT at 33% | 30,106 euro |
Enhancement expenditure covers capital spending that added value between the inheritance date and the sale, such as an extension or full rewire. Routine maintenance does not qualify. Legal fees and estate agent commissions on the sale are fully deductible. The 1,270 euro annual exemption is personal and applies once across all capital disposals in the same year.
Principal Private Residence Relief
If the inherited property becomes your principal private residence and you live in it as your main home before selling, the period of genuine owner-occupation qualifies for PPR relief. The relief reduces the taxable gain proportionally: the ratio of PPR time to total ownership time. For CGT purposes, ownership runs from the date of death, not from the date probate is extracted. The final 12 months of any ownership period are always treated as deemed PPR, meaning a property you genuinely lived in at any point gets a 12-month concession at the end. A property inherited and sold immediately without being used as a PPR has no PPR relief available.
The CAT and CGT Double Taxation Problem
Where you paid Capital Acquisitions Tax on an inherited property and then make a capital gain when you sell it, Irish law provides a credit to prevent full double taxation. Under Section 104 of the Capital Acquisitions Tax Consolidation Act 2003, the CAT paid can be offset against the CGT liability on the same asset, to the extent both taxes arose on the same appreciation in value. This is not a full exemption. It is a calculated credit, and it requires both the CAT assessment and the CGT computation to be reviewed together before the credit is applied correctly. Our capital gains tax ireland service includes this offset calculation as standard.
How the CAT and CGT Offset Works
| Element | Detail |
|---|---|
| Credit formula | CAT paid multiplied by (CGT gain divided by CAT taxable value of inheritance) |
| Maximum credit | The full CGT liability. The credit cannot generate a refund. |
| Condition | Both taxes must relate to the same property and the same period of appreciation |
| Where sale price is below probate value | No CGT gain arises, so the offset is not relevant |
| Where no CAT was paid (e.g. spouse inheriting) | No CAT credit is available against the CGT |
Getting this calculation right requires the original CAT computation, including the exact taxable value and CAT paid. Where estate files are with a solicitor or a different tax adviser, obtaining those figures before the sale completes is essential. Sellers who proceed without the offset calculation risk overpaying CGT that could lawfully have been reduced.
CGT Payment Dates for Inherited Property Sales
CGT on a property sold between 1 January and 30 November must be paid to Revenue by 15 December of the same year. A December sale has a later payment deadline of 31 January of the following year. Interest at 0.0219% per day applies from the payment due date if payment is missed. The gain must also be reported on the income tax return for the year of disposal. Payment and reporting are separate obligations, and missing either one generates a penalty independently of the other.
Questions About CGT on Inherited Property in Ireland
Does holding the property for a long time reduce the CGT?
No. Indexation relief, which adjusted the base cost for inflation, was abolished in Ireland in 2003. The gain is the nominal difference between the probate value and the sale price regardless of how long the property was held. The only way time affects the outcome is through PPR relief, where periods of genuine owner-occupation reduce the taxable proportion of the gain.
What if the estate has not been finalised and the executor wants to sell?
Where a property is sold before probate is extracted, the executor is the selling party and CGT during the period of estate administration is an estate liability. The beneficiary’s CGT exposure begins when the property is formally assented to them. Both the executor and the beneficiary should take specific capital gains tax ireland advice before any sale in an unsettled estate.
If I gift the inherited property to a family member, does CGT arise?
Yes. A gift of property is a disposal at market value for CGT purposes even where nothing is received. If the property has increased in value since the inheritance date, CGT arises on the gift. The recipient simultaneously takes a CAT liability based on the value received. Both taxes can arise on the same transfer, and the CAT/CGT offset may or may not apply depending on whether both taxes relate to the same appreciation in value.
If two siblings inherit the same property and sell it, how does CGT work?
Each sibling has their own CGT position based on their share of the probate value and their share of the sale proceeds. Each is entitled to their own annual exemption of 1,270 euro. Where both paid CAT on their respective inheritance shares, each can apply the offset credit to their own CGT liability. CGT returns are filed separately by each sibling.
Is the CGT position different for a spouse inheriting versus a child inheriting?
The base cost rules are the same: the probate value becomes the CGT base in both cases. The difference is in the CAT position. A surviving spouse pays no CAT regardless of the inheritance value, so no CAT credit is available against future CGT. A child who inherits above their Group A lifetime threshold (400,000 euro) pays CAT on the excess, which creates a potential offset credit when the property is later sold.
How We Help With Inherited Property Sales
We prepare capital gains tax ireland calculations for inherited property sales, including the Section 104 CAT/CGT offset where applicable, and file the required payment and return on time. Where an estate is still being administered, we coordinate with the executor’s solicitor to confirm the CGT position before the sale closes. If you have recently inherited a property and are considering selling, reviewing the tax position before contracts are signed leaves more options available than reviewing it after.