Hello and welcome to the Someplace Else blog.
This week I’m going to briefly address a hugely important subject that seems to be widely misunderstood and misinterpreted by the overseas property industry – the tax implications of foreign property ownership.
Although I’m going to provide various links for further information, I’d like to limit this article to two issues solely from an Irish residents tax perspective.
Paying tax on rental income earned from an overseas property, and
Paying capital gains tax on the profits from the sale of an overseas property.
1. Paying Tax on Rental Income
In a nutshell, if you receive rental income from a foreign property, you will have to pay tax on the net profit to the Irish authorities on or before 31st October of each tax year. It doesn’t matter whether you bring the money into Ireland or leave it in a foreign bank account. For a detailed guide to taxation on rental income, please click here.
If you are already paying income tax in the country where your property is being rented, you are still liable to pay income tax in Ireland, although you will be able to reduce your tax liability to take into account some or all of the income tax already being paid abroad. The actual amount of this reduction mostly depends on whether or not Ireland has a double taxation agreement with the country where your property is. Click here for a list of these countries.
For a detailed example of foreign tax liability in a country with versus a country without a double taxation agreement with Ireland, please view page 14 of this document.
2. Paying capital gains tax on a foreign property
A simple rule of thumb for an Irish resident is as follows: if you sell a foreign property for a profit, you are subject to Irish capital gains tax within that tax year. The standard rate is 20% and it doesn’t matter whether you bring the money into Ireland or leave it in a foreign bank account. For a detailed guide to capital gains tax, please click here.
If you own your foreign property through a foreign company, it is more complicated, but generally speaking, you will still be liable to pay Irish capital gains tax on the disposal of your share in this company.
If you buy a property offplan and sell (flip) it on before completion, any increase in value is still liable to Irish capital gains tax.
As per the income tax paragraph above - if you have already paid capital gains tax (or equivalent) in the country where your property is based, as an Irish resident, you are still liable to pay capital gains tax in Ireland. However will be able to reduce your tax liability to take into account some or all of the capital gains tax already paid abroad. The actual amount of this reduction mostly depends on whether or not Ireland has a double taxation agreement with the country where your property is. Click here for a list of these countries.
For a detailed example of capital gains tax liability in a country with versus a country without a double taxation agreement with Ireland, please view page 18 of this document.
3. Conclusion
That’s it. I hope some of you found this useful. Nobody likes thinking about or studying taxation, but if your aim is to make lots of money on the overseas property markets, I’m afraid it’s something you are going to have to spend time on.
For information on all of our projects, including a new project in Bolivia, please view our website.
Kind Regards
Colin Murphy.
Disclaimer: I would like to state that I am not a qualified tax advisor and that this short article is merely my interpretation of information freely available from the Irish Tax authorities. Responsibility cannot be accepted for any losses suffered as a consequence of relying on the information contained in this article.
This week I’m going to briefly address a hugely important subject that seems to be widely misunderstood and misinterpreted by the overseas property industry – the tax implications of foreign property ownership.
Although I’m going to provide various links for further information, I’d like to limit this article to two issues solely from an Irish residents tax perspective.
Paying tax on rental income earned from an overseas property, and
Paying capital gains tax on the profits from the sale of an overseas property.
1. Paying Tax on Rental Income
In a nutshell, if you receive rental income from a foreign property, you will have to pay tax on the net profit to the Irish authorities on or before 31st October of each tax year. It doesn’t matter whether you bring the money into Ireland or leave it in a foreign bank account. For a detailed guide to taxation on rental income, please click here.
If you are already paying income tax in the country where your property is being rented, you are still liable to pay income tax in Ireland, although you will be able to reduce your tax liability to take into account some or all of the income tax already being paid abroad. The actual amount of this reduction mostly depends on whether or not Ireland has a double taxation agreement with the country where your property is. Click here for a list of these countries.
For a detailed example of foreign tax liability in a country with versus a country without a double taxation agreement with Ireland, please view page 14 of this document.
2. Paying capital gains tax on a foreign property
A simple rule of thumb for an Irish resident is as follows: if you sell a foreign property for a profit, you are subject to Irish capital gains tax within that tax year. The standard rate is 20% and it doesn’t matter whether you bring the money into Ireland or leave it in a foreign bank account. For a detailed guide to capital gains tax, please click here.
If you own your foreign property through a foreign company, it is more complicated, but generally speaking, you will still be liable to pay Irish capital gains tax on the disposal of your share in this company.
If you buy a property offplan and sell (flip) it on before completion, any increase in value is still liable to Irish capital gains tax.
As per the income tax paragraph above - if you have already paid capital gains tax (or equivalent) in the country where your property is based, as an Irish resident, you are still liable to pay capital gains tax in Ireland. However will be able to reduce your tax liability to take into account some or all of the capital gains tax already paid abroad. The actual amount of this reduction mostly depends on whether or not Ireland has a double taxation agreement with the country where your property is. Click here for a list of these countries.
For a detailed example of capital gains tax liability in a country with versus a country without a double taxation agreement with Ireland, please view page 18 of this document.
3. Conclusion
That’s it. I hope some of you found this useful. Nobody likes thinking about or studying taxation, but if your aim is to make lots of money on the overseas property markets, I’m afraid it’s something you are going to have to spend time on.
For information on all of our projects, including a new project in Bolivia, please view our website.
Kind Regards
Colin Murphy.
Disclaimer: I would like to state that I am not a qualified tax advisor and that this short article is merely my interpretation of information freely available from the Irish Tax authorities. Responsibility cannot be accepted for any losses suffered as a consequence of relying on the information contained in this article.
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