I plan to invest in a buy to rent, max price €225,000. I already have a share-owned home with my brother, no mortgage, would be a cash buyer; the majority of my savings are in the UK. I have lived and worked there for many years but am now retired and have moved to Ireland permanently. What stamp duty and taxes would I be liable for? I would appreciate some advice.
You can bring in capital which you have saved in the UK into Ireland to buy the property, but you will likely need to provide evidence of the source of the funds as a cash buyer. The taxes to consider are stamp duty, tax on rental income and Capital Gains Tax (CGT).
Stamp duty will be charged at 1 per cent of the purchase price of the property. This would mean that a house bought for €225,000 would require a stamp duty payment of €2,250. Your solicitor will normally handle the stamp duty on your behalf. The price that you pay will include VAT if the property is considered new and this will be built into the selling price.
Annual income tax will be payable on the rents received from the property after deducting allowable expenses. These include such expenses as repairs, Residential Tenancies Board (RTB) registration, letting fees, a wear and tear allowance for furnishings.
Rental income is liable to PAYE, USC and PRSI. You will be required to register for self-assessed taxes and file an annual income tax return each year. Preliminary tax is paid in advance of the year end each year. You will be also be liable for Local Property Tax each year and you will have to register for this tax. You must also register the letting with the RTB and there is a fee for the registration.
If you sell the property at a later date, CGT will be payable on any chargeable gain. The chargeable gain is the difference between the sale price and the purchase price and any “allowable expenses”. The rate of CGT is 33 per cent on property. There are costs that you can deduct from the sale price to work out your chargeable gain, such as costs of buying/selling and any significant capital improvement costs.
Suzanne O'Neill is a tax partner at RSM Ireland, rsmireland.ie