Irish Property Sales as a Non-Resident.
The Irish property market is currently showing a good bit of staying power, with prices still on the up despite some wobbles in the wider economy. When you look at recent sales, the middle-of-the-road price for a home has climbed, and Dublin’s seen a solid rise in what you’d pay for a place. Interestingly, prices outside the capital have actually grown even more, with some regions seeing quite a jump. While there might be slightly fewer homes changing hands compared to before, the overall amount of money being spent on property is still significant, which tells you there’s still a good level of interest from buyers.
So, what’s causing all this? Well, there’s still a strong appetite for homes, driven by more people needing places to live and a healthy jobs market. This demand is consistently higher than the number of homes actually available, which naturally pushes prices upwards. Even though the European Central Bank has started to nudge interest rates down, we haven’t seen a huge drop in mortgage rates here just yet. At the same time, the folks trying to build more homes are working hard to meet the government’s targets, but they’re facing ongoing headaches with planning permission, building rules, and the cost of materials, which slows things down.
Looking forward, it seems like the market will probably keep growing, although maybe not at the same rapid pace. If interest rates continue to ease as expected, that should give some breathing room to people with mortgages and those looking to buy. However, the big elephant in the room is still the lack of available homes – that shortage is likely to keep prices from falling much. What the government does to make it easier to build more houses and streamline the planning process will really shape where the market goes from here.
All in all, the Irish property market right now is a bit of a mixed bag. There’s definitely price growth, but there’s also a growing concern about how affordable homes are becoming, and a clear need to get more houses built to create a more balanced situation. It’s a delicate dance between economic factors, what the government decides to do, and the basic issue of supply and demand that will continue to call the tune in the Irish real estate world.
For non-resident owners selling real estate in Ireland, a meticulous approach to procedural and tax matters is crucial. Ensuring that advisors diligently handle these aspects can prevent significant complications, including delays in closing the sale, cash flow disruptions, and unexpected tax liabilities. This article highlights the key considerations for non-resident sellers of Irish property, emphasizing the necessity of proper procedures.
One of the foremost considerations is Capital Gains Tax (CGT) clearance. Irish law mandates that a buyer must withhold 15% of the sale price when acquiring a commercial property exceeding €500,000 or a residential property over €1 million from a non-resident vendor, unless the vendor provides a CG50A certificate. This certificate can be applied for online through the Revenue OnLine Service (ROS) and requires a completed application form detailing the asset, vendor(s), and buyer(s), a copy of the signed sale contract (or a solicitor’s undertaking to provide it), and a CGT computation with proof of payment (or a solicitor’s undertaking to pay the liability from the sale proceeds). Obtaining this CG50A certificate, typically issued within 48 hours of online application, is vital to avoid the mandatory withholding.
Furthermore, Irish real estate is classified as a specified asset for tax purposes, meaning any gains from its disposal and any rental income generated during ownership are always subject to Irish tax. Irish tax legislation holds agents, including the acting solicitor, potentially liable for CGT if the non-resident vendor fails to pay the arising tax liability on the property’s disposal. To mitigate this risk, a well-established tax clearance process exists. A solicitor acting for a non-resident vendor can apply to Revenue via ROS for tax clearance to release the sale proceeds to the vendor from their client account. This application necessitates a completed and signed form from the non-resident vendor, a Form CG1 for the relevant tax year, a CGT computation outlining the sale proceeds and deductible expenses, evidence of CGT payment (if applicable), and a copy of the signed sale contract.
Revenue has committed to responding to these tax clearance applications within 35 working days, indicating whether a vendor review will be conducted, if further information is required, or if clearance has been granted. Crucially, if no response is received within this timeframe, the submitting agent is then permitted to distribute the sale proceeds to the non-resident vendor. Sellers must be aware of this potential delay when planning any financial commitments related to the sale proceeds. Finally, Value Added Tax (VAT) implications may arise depending on the property’s circumstances, such as commercial properties where VAT was applied to leases or residential properties with historic waivers of rental exemptions. If a VAT registration is in place, a careful assessment of the sale’s impact is essential, as it could trigger unexpected VAT costs like Capital Goods Scheme (CGS) adjustments or Deductibility Adjustments, particularly where a historic waiver of exemption exists, potentially leading to a clawback of previously claimed VAT and/or a CGS adjustment. Thorough attention to these VAT status and potential consequences is paramount for a smooth disposal process.
