Inheriting the family home: the dwelling house exemption

An inherited home can be free of inheritance tax if you lived there for three years and own no other home. You must keep living there for six years after.

The dwelling house exemption takes a home completely out of Capital Acquisitions Tax when it's inherited by someone who has lived in it. It doesn't use up any of your group threshold. The conditions are strict, and these apply to inheritances after 25 December 2016.

The conditions for an inheritance

• the house was the only or main home of the person who died, on the date of death
• you lived in it as your only or main home for the three years immediately before the inheritance
• on the date of the inheritance, you don't own or have an interest in any other house
• you don't get an interest in another house from the same person between the inheritance and the valuation date
• you keep it as your only or main home for six years after the inheritance

Revenue allows some exceptions:

• the first condition doesn't apply if the person who died was away from the home because of illness or infirmity. Nor does it apply if you are their dependent relative
• time you spent away because of mental or physical infirmity counts as living there
• the six-year condition doesn't apply if you're 65 or over at the inheritance, or if your job requires you to live elsewhere. Nor does it apply if a doctor certifies that you must live elsewhere because of infirmity

What it's worth

A nephew who has lived with his aunt for the last five years inherits her house, worth €380,000, in November 2026. He owns no other property.

Without the exemption, his Group B threshold would cover only a small part of the house. With it, the house isn't taxed and his threshold is untouched for anything else he inherits.

Gifts of a home

A gift of a house qualifies only if you're a dependent relative of the giver or their spouse or civil partner. That means, at the date of the gift, you are:

• permanently and totally incapacitated by mental or physical infirmity, so you can't support yourself, or
• aged 65 or over

The three-year, no-other-house and six-year conditions also apply, with the same exceptions for age and infirmity.

Losing the exemption

Revenue withdraws the exemption if, within six years, you sell the house and don't replace it with another only or main home. It also withdraws it if you stop living there for a reason other than those above. If you sell and put only part of the proceeds into a replacement, part of the tax becomes due. It is also withdrawn if you later take another interest in a house from the same person.

Claiming it

You claim the exemption on a Form IT38 return filed online through myAccount or ROS, by the normal inheritance tax deadline. Keep evidence that you lived there, such as bills, bank statements or the electoral register.

Work it out

• Gift and inheritance tax (CAT) →

Sources

• Revenue: CAT exemption for a dwelling house (checked 16/10/2026)
• Revenue: What do you not pay CAT on? (spouses, €3,000 small gift exemption) (checked 25/10/2026)
• Revenue: IT38 filing obligations (80% of the group threshold) (checked 25/10/2026)

General information, not tax advice. HeyPenny is not a tax agent.