Taxation in Ireland

The reason you need a PPS number before buying a property in Ireland is because there are several Irish taxes that will need to be paid. It can be hard to keep track of all the different requirements, but your solicitor will be able to advise you. If you’re really unsure, an Irish tax advisor will help you make sense of what must be paid.

New and resale tax and stamp duty

Purchase taxes, known as stamp duty, are payable at 1% on purchases of up to €1M, and 2% at levels above this. This is a legal requirement and is paid to the Irish tax authority. When selling a property, Capital Gains Tax may be applicable depending on the profit made.

The local property tax

Both new and older properties are also subject to local property tax (LPT). The amount of LPT due depends on the value declared for the property on 1 May 2013, and the LPT rate which applies to the property in the present year. Property values are organised into valuation bands. The tax liability is calculated by applying the tax rate to the mid-point of the band. The rate of LPT is 0.18% for properties valued up to €1M.

Residential properties valued over €1M are assessed at 0.18% on the first €1M and 0.25% on the rest €1M (no banding applies).

It’s worth noting that some local authorities adjusted the LPT rate for 2017 by up to 15% and that LPT rates can vary between counties – check with your solicitor for further information.

Tax obligations

The issue of taxes in Ireland is a complex area, and professional advice is recommended as obligations can vary depending on whether you’re a non-resident or resident.

Buying a property as a non-resident in Ireland will mean paying non-resident income tax and local property tax.

Tax is based on any income generated by the property. For example, the net income after expenses if the property is rented, but it’s worth taking time to look into this.

Double Taxation Treaty

Britain has a double taxation agreement with Ireland to ensure people don’t pay tax on the same income in both countries. In accordance with Irish and international law, all residents in Ireland (nationals and non-nationals alike) are required to declare assets or groups of assets held outside Ireland. Assets may include bank accounts, securities, rights, insurance, annuities and property.

The declaration is a separate exercise to the annual tax return. To reinforce this obligation, and as part of Ireland’s anti-fraud law, the government requires all residents in Ireland to file an annual informative declaration of assets held overseas by 31 March each year. Severe penalties for incorrect, incomplete or late reporting can be incurred and the legislation also means that criminal charges can be brought in the case of noncompliance.

Utilities and taxes check

If there are outstanding payments, the debts may need to be settled before the property is transferred into your name. Outstanding taxes must also be paid before you can take ownership of the property, so be sure to check the following; electricity, water, management fees, refuse collection, local property tax etc.

Continue to section 4: Mortgages in Ireland