There are multiple tax implications when an individual or business decides to sell a property. BCA’s specialist Property, Advisory and Taxation teams are experts in assessing the financial issues of any property transaction alongside the taxation issues which can arise throughout the course of property ownership.
At BCA we understand the decision to buy or sell a property as an individual or business requires careful consideration of the appropriate taxation and cashflow implications of the transaction. When acquiring a property the purchaser must take due consideration of maximising the after tax return should they sell the property in the future.
For property investors the taxation of rental income is a significant income and for properties acquired for use as part of a business the question always arises as to whether it is more beneficial to amalgamate the property with the other business assets or to retain in a Special Purpose Vehicle (SPV).
There are a multitude of tax implications when an individual or business decides to sell a property. We understand the taxation and cash flow complexities and we provide our clients access to BCA’s specialist advisory and tax teams..
Peter Sullivan, Partner
BCA’s specialist Advisory and Taxation teams are expert in assessing the financing issues of any property transaction alongside the taxation issues which can arise throughout the course of property ownership.
Caroline McGrath, Tax Director
Depending on the circumstances of each individual or investor the acquisition of a property will generally have an impact on cash flow and cash reserves. It is important that the long term nature of a property acquisition is appropriately married with the long term cashfow requirements of the individual or entity. In this regard a detailed review and assessment of the acquisition costs, financing structures and costs, income generated and loan repayments is required.
Payable by the purchaser on of Irish situate property. The rate of stamp duty will vary from 1% to 2% depending on whether the property is residential or commercial and the value of the property in the case of residences.
Stamp duty can also arise on the creation of a lease depending on the length and terms of the lease.
Rental income generated by Irish property is taxable regardless of the residency of the property owner. Rental income received by an individual will be subject to Income Tax and taxed at either the 20% or 40% rate depending on the individual’s circumstances, additional PRSI and USC charges may also apply.
Rental income received by a company can be subject to tax at the 12.5% rate or in the case of a passive investment subject to a 25% rate. In the case of a passive investment the additional imposition of a close company surcharge could increase the effective rate to 40%.
VAT on property rules introduced in 2008 can be complex and relate to the specific circumstances and history of the property. In determining the VAT effects of any property transaction a detailed due diligence of the history of the property and the use to which the property will be put should be carried out. Depending on the outcome of this due diligence there may be a number of options available to both vendor and purchaser to minimise any VAT implications arising on the transaction.
CAPITAL GAINS TAX
Chargeable gains arising on the disposal of Irish property is subject to Capital Gains Tax at the rate of 33%.
CAPITAL ACQUISITIONS TAX
Irish CAT at the rate of 33% applies to gifts and inheritance of Irish situate property subject to various specific circumstances and exemptions.