Wish you were there?

You stand on the balcony of your villa wearing a white linen suit gazing out over the olive and lemon trees to the azure sea far below. A warm soft breeze is blowing and you are considering wandering down your private path for a swim in the cove.

But first you nip inside, cocktail in hand, to do a little Internet banking, check your investments and to book your tickets for the next visit home. All that's left on your list of things to do today is to pick up some bread and fruit in the village and to finish off the invitations to your 70th birthday party.

If this is the kind of tanned, relaxed and rain-free retirement you imagine for yourself, you are not alone. Increasing numbers of Irish people are now in a financial position to relocate to the sun for their golden years and they are snapping up properties in well-known destinations.

But before you even think of looking for the dream property in the dream location, it's essential to concentrate on planning and research to make sure the fantasy is workable and doesn't become a financial disaster.

The first consideration is residence. Residency status depends on the number of days you are present at midnight in a particular jurisdiction. It's a mathematical exercise and it takes 183 days presence in a country in one tax year or 280 over two consecutive tax years to establish residence. That means to be non-resident in the Republic of Ireland, you need to spend less than 41/2 months a year here.

To be practical, retirees need to decide whether they will keep Irish residency, establish residency in the other country or become non-resident anywhere. Tax affairs can then be arranged accordingly and this is where good advice comes in.

When a person loses their residence status their Irish-sourced income remains taxable in Ireland. If that individual is also liable to tax on the same income in another country it takes a little effort to avoid double tax charges.

The Republic has Double Taxation Agreements (DTA) with 36 countries from Australia to Zambia. By getting the right forms at the right time the individual can either qualify for an exemption from Irish tax or can be provided with credit in one or other of the states.

Getting your sums wrong could mean you lose out significantly and the last thing anyone wants is to be in a position where they can't afford to come home if things don't work out.

Mr Aidan McLoughlin, financial adviser with Financial Engineering Network, is dealing with many clients who are taking steps towards spending a substantial amount of time abroad, while maintaining a presence at home.

"The taxation position depends on the nature of the assets and on whether there is a DTA in place with the other country. Unit funds or equities are generally only taxed in the country where you are resident," Mr McLoughlin said.

In the case of rental income from property, this nearly always attracts tax unless relieved by a DTA. Tenants who are renting directly from non-resident landlords should deduct the standard rate of tax from their rent which they remit directly to the Revenue Commissioners. The letting agent can also carry out this function.

Dividend Withholding Tax is not deducted at source for non-residents and non-residents are exempt from DIRT.

Non-residents are taken out of the Capital Acquisitions Tax net after five years. Pensions are usually taxed where the person is resident and when someone settles abroad they need to apply for an exclusion order to send to the pension provider. The full pension is then sent to the individual and they can settle the tax liability locally. Social welfare pensions are also payable wherever the recipient is resident.

When a person moves abroad, there is a transitional period of around six months before they become resident of the other country. At this point, it is necessary to obtain an Individual General Form from the Revenue Commissioners which has to be certified by a local tax official in the country to prove residence.

The form is then sent to the International Claims Section of the Revenue Commissioners in Nenagh, after which an exemption or exclusion order can be issued for the current year and for the four following tax years. At the end of four years you have to reapply for a renewal of the exemption order.

Inheritance tax laws can differ from jurisdiction to jurisdiction. In Portugal, for instance, a person who dies without a will can lose ownership of their assets. It is crucial to have an Irish will for Irish assets as well as a separate will in the second country.

Apart from purely financial planning, it is very important to look into healthcare arrangements. State medical care systems differ wildly even within the EU and it's essential to find out what kind of cover or standard of treatment you would be entitled to or able to afford.

Talking to Irish people who have already settled down in your chosen destination is one excellent way to get a realistic picture of the problems involved in relocating. There are also numerous guides to living abroad which are mainly aimed at the British market but are full of useful and relevant information.

Ms Vicky Rivera is an estate agent in Marbella who has seen Irish buyers become serious players in the local property market over the last three years. She advises prospective buyers to take their time and never be hustled into making a quick decision.

"Always deal with a reputable agent and spend time looking at what's available in the area, not just focusing on one scheme," Ms Rivera says. She also recommends using a local solicitor who speaks English.

It's also worth researching the price and frequency of transport arrangements between Ireland and the other country all year round. If you are opting for a remote location and you don't have a private jet and airstrip, will it be an ordeal every time you need or want to visit home?

Finding a property won't be a problem, once you have decided on the location but make sure you get independent financial advice at all stages of the process. It's important to identify the full costs of purchasing and owning property, including rates or annual property tax. If you are planning on renovating, you should be realistic about the local culture and working practices.

Retiring to a country with the promise of a better climate and quality of life is an idea that appeals to many people and it can be a wonderful experience. But it is a decision that needs to be well thought through and planned at least a year in advance.