Investing in Property in the Republic of Ireland

1
Investing in Property in the Republic of
Ireland

• Kerri OConnell
• Taxation Partner, Hamill Spence OConnell

2
Entity Selection

• Private ownership
• Partnership
• Company
• Trusts discretionary/bare
• Self-administered pension schemes

3
Private Ownership Partnership

• Marginal income tax rates (20/42) and levies
  (6/2) on rental surpluses
• Irish social security (PRSI) may arise
• Tax year calendar year
• Partner subject to income tax/levies on his/her
  share of partnership surpluses

4
Property Company

• Corporation tax rate of 25
• Close company surcharge 20 on undistributed
  after-tax rental surpluses
• Tax year companys a/c year-end
• Phased preliminary tax arrangements
• Use of property company to avoid high stamp duty
  rates

5
Trusts Bare/Discretionary

• Bare Legal ownership held by trustee
  beneficial ownership held by beneficiary
• Discretionary Ownership held by trustees list
  of potential beneficiaries appointments of
  income/capital at trustees discretion

6
Features of Irish Property Landscape

• High stamp duty rates effectively 9 on all
  commercial transactions
• Restructuring to allow sale of property company
  as opposed to sale of property
• Specific income/corporation tax rates for dealing
  in land/buildings

7
Features of Irish Property Landscape (contd)

• Complicated rules regarding VAT on property,
  especially in the use of long leases
• Use of Economic Value test
• Assignment/surrenders of long leases

8
Features of Irish Property Landscape (contd)

• Tax-incentivised property schemes specifically
  legislated for
• Two broad categories
• Specific types of property development e.g.
  childcare facilities, private hospitals, sports
  injury clinics, student accomodation, third level
  institutions, park and ride facilities
• Property development in specific geographical
  areas

9
Popular Sites

• Commercial Dublin
• Returns 2.5 to 5
• Slowdown in market outside Dublin
• Residential Dublin/Limerick/Galway
• Rental market has softened
• Summer homes
• SE Coast (Wicklow/Wexford)
• West Coast (Kerry/Cork/Clare/Donegal)