The process of purchasing property in Ireland is not that different from other European countries. If you have all the funds needed at once, it’s even easier and faster. As a general rule, foreigners who want to buy property in Ireland are expected to make a 30-50% deposit. If you want to buy the property through a mortgage, you should keep in mind that the application process can be quite a challenge as most Irish banks consider non-Irish residents a greater risk.
Who can buy property In Ireland?
The Irish jurisdiction does not impose any restrictions on buying property in Ireland. Even individuals who only have visas can own a property in Ireland. The doors are open for all nationalities. However, owning a property doesn’t necessarily grant you permission to reside in Ireland. In order to live in Ireland, you will have to have the necessary documents needed by the Irish jurisdiction.
Stages of buying property in Ireland
- Negotiation Stage. At this stage, the buyer and the seller negotiate on their own, without solicitors.
- Pre-contract stage. he buyer and seller approach a solicitor to start the documentation.
- Completion stage. his is the final stage and generally has to involve solicitors for the signing of documents and all the judicial procedures.
The length of the purchase depends on a number of factors, in particular, whether the purchaser is using cash, mortgage etc. On average, the transaction should take around 4 weeks.
6 facts you should keep in mind when buying a property in Ireland
- For non-EEA citizens, owning a property in Ireland doesn’t automatically grant you the permission to start business operations. In order to start business activities, you will have to apply for permission separately to the Minister of Justice Equality and Law Reform. However, if you are a resident of the EU or EEA, you can carry out business activities in Ireland without restrictions because of the general principles of EU law. Any company in Ireland with at least one director can conduct business activities in Ireland. Nonetheless, the residence of each employee or director will be treated separately, depending on the circumstance of the individual.
- Tenants of non-Irish residents landlords are entitled to withhold 20% of the annual rent and pay the sum to the Irish Revenue. This is in accordance with the section 1041 Taxes Consolidation Act 1997. The only exemption is if the non-Irish resident has appointed a “Collection Agent” who will pay the tax for the respective property. Collection Agents can be any Irish resident, however, it is more preferable that the collection agent be a real estate agent, an accountant or a solicitor. The process of appointing a collection agent is not complicated at al3.The landlord has to register his or her PPS number for income tax.
- The Collection Agent will have to apply to the Department of Social Protection for another separate tax number or Public service number. The Revenue will evaluate the collection agent and give approval. After this, the tenant can pay rent to the collection agent without any tax deductions.
- If you are purchasing commercial property, you are entitled to pay 6% of the market cost of the property. However, if you are purchasing a residential property, the stamp duty is only 1%. Keep in mind that this only applies to residential properties below €1m. For residential properties above €1m, you will have to pay 2%. The stamp duty should be paid within 30 days of completion of the purchase process.
- Owners of residential property in Ireland are liable to pay an annual “local property tax” of 0.18% of the market value. If the residential property is worth over €1m, the local property tax will be 0.23% of the property’s market value. This money should be paid every year to the Irish revenue before the 10th of January. Note that these values are subject to change and you should always cross check each year.
- Tax rates might vary depending on a number of factors. For instance:
- Non-resident landlords who are residents of countries which signed double treaties with Ireland will not pay more tax than they would in their own country.
- In some cases, service charges should be paid to a management company where the residential or commercial property is located. Value Added Tax (VAT) is levied at a standard rate of 23%, effective 01 January 2012.
- The Legal Fees for the procedure will vary depending on the solicitor you choose. Some solicitors will charge a percentage of the purchase price while others require a fixed price plus the standard 23% VAT.
Irish properties are pretty expensive but the rentals prices in Dublin and other major cities are high so the ROI is quite satisfactory in the long run. To get more insights into the complex process of purchasing property in Ireland and avoid the common pitfalls, you can reach out for expert advice and assistance from SIGTAX consultants. Our friendly team is ready to assist anytime, don’t hesitate to call.