Are you planning to buy a property in Ireland?

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Investment climate and market trends

The residential and commercial real estate market in Ireland is expected to remain strong in 2019. The Irish residential real estate market remained stable in 2018, with the national residential property price index increasing by 8.44% (adjusted for the inflation) between January 2018 and October 2018, according to the Global Property Guide.

Specifically, house prices rose 8.57% (7.61% adjusted for inflation) and apartment prices in Ireland rose 9.74% in the year ending October 2018 (8.77% adjusted for inflation), according to the Global Property Guide. According to Standard & Poor, residential property values ​​are expected to continue to rise as supply catches up with demand and the labor market tightens.

When it comes to commercial real estate, experts predict a strong 2019. Domestic investments above 1 million euros ($ 1.13 million) in the Irish property investment market totaled almost 600 million euros ($ 675 million) in the first quarter of 2019, according to the World Journal of the property.

Whether for commercial or residential purposes, the process of buying real estate in Ireland is not as difficult as one might imagine for non-residents. There are, however, some considerations that potential buyers should understand when buying property in Ireland.

Most importantly, potential US buyers should retain the services of an experienced Irish lawyer, a ‘solicitor’, experienced in handling real estate transactions, who can guide you through the process and ensure that your interests are protected. .

Are there any restrictions on non-residents buying property in Ireland?

  • There are no restrictions for non-residents buying property in Ireland.
  • Owning a residence in Ireland does not entitle the owner to residence. Residence and the right to remain in Ireland depend on the particular circumstances of the individual.
  • Owning commercial property in Ireland does not entitle a non-resident to operate a business there. Only nationals of the European Union can operate a business and live in Ireland without restriction under general principles of European Union law.
  • Non-European domestic companies must have at least one director residing in Ireland for the company to operate on the property.

Taxation

Taxation should also be considered from the outset to include the most tax efficient structure for holding property. Due to the influx of foreign investment and the market experience since the economic downturn, a number of structures can be considered dependent on the level of investment. A general overview of tax considerations is presented below.

  • Acquisition tax: stamp duty applies at the time of purchase, 1% up to € 1m, 2% above 1m on residential properties and 6% on commercial properties
  • Capital gains tax applies to capital gains on disposal: currently 33%.
  • An annual charge (called “local property tax”) of up to 0.18% of the market value of residential property in Ireland up to a value of 1 million euros, and up to 0.23 % on the balance of the market value in excess of € 1 million must be paid to the tax authorities no later than January 10 of each year for residential “buy to let” properties.
  • The tenant of a non-resident owner is required, under the current tax legislation, to withhold 20% of the annual rent and to pay it to the tax authorities (unless the non-resident owner has a collection agent) to be assessed for tax on rental property rental.
  • Value Added Tax (VAT) will also need to be considered in the context of commercial real estate.

The buying process

Typically, a property is identified, potentially through an agent, and conditions such as price, time to close, etc. Once the HOT has been accepted and the deposit paid, the contacts will be delivered to the lawyer retained by the buyer. Completing the HOT purchase upon closing of the deal and taking possession of the property can take six to eight weeks for residential real estate, assuming there are no delays or complications. This period is likely to be longer if financing is required and 12 to 16 weeks is more realistic for non-resident buyers and this period should apply to commercial real estate.

Why do i need a notary for a real estate transaction?

A notary works on behalf of the buyer and takes care of all legal formalities throughout the process of buying real estate. The main areas in which a lawyer advises are title / planning, due diligence, negotiation of contract terms, transaction completion, payment of stamp duty, transfer of ownership and registration of the contract. ownership after completion. The notary will review all existing leases and inform them of the conditions and any pitfalls. The lawyer will also advise on management structures where the property is part of a larger structure (building / large building, etc.).

The transaction is generally conditional on a satisfactory architectural report on the structure of the property and a bonded surveyor / architect is retained for this purpose.

Property registration—At the end, your attorney will pay the balance of the purchase funds on your behalf, which will also include any distributed amounts relating to the annual service charge for the property (when the property is in a managed estate and a company management manages the common property areas of the domain) and the local property tax. Once the transaction is complete, your attorney will pay the stamp duty for the property on your behalf and register the deed of purchase with the relevant property registration authority.

Other points to consider

  • Drafting and execution of an Irish will providing for the disposition of the property in the event of the owner’s death;
  • Ongoing management and processing of tax compliance, etc.

Conclusion

Whether you are looking to buy residential or commercial real estate in Ireland, Americans and other non-residents will benefit from the advice of an experienced real estate lawyer who is familiar with local regulations and who will negotiate on your behalf and protect your interests.

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