From unique to established, the property map for investors is a diverse as individual tastes require. In this special report, Business Ireland looks at the property hot spots savvy Irish investors are choosing around the world.
'When acquiring property abroad, the legal issues and tax implications must be addressed' advises Sinead Brady of Lennon Heather and Company. 'All countries have their own legal systems governing the purchase, sale and ownership of property. It is therefore vital to seek legal advice from an independent local lawyer who can provide sound legal advice.'
The necessity for legal advice has been highlighted in recent times by the planning scandal in Spain where it was discovered to the horror of many property investors that their holiday homes had been constructed without planning permission. A proper investigation of title by any lawyer should reveal such a title defect. Whilst the lack of planning permission is of serious concern it is not, in fact, uncommon. For instance, in Istanbul in Turkey it is estimated that approximately 60 per cent of buildings have been legally constructed.
'In addition to investigating planning issues, a purchaser's lawyer will investigate the title to a chosen property to ensure that the intended seller has an entitlement to sell the property', explains Ms Brady. 'In reality, there can be instances where title deeds are missing or the title is found to be defective and, more seriously, where vendors are not, in fact, the legal owners of the property in question.'
'Obviously, it is essential to ensure that there are no restrictions on resale of the investment property in the country in question and to investigate the tax implications of importing the sales proceeds into Ireland rather than reinvesting abroad', adds Ms Brady. 'Thorough tax advice is therefore essential prior to any foreign property acquisition.'
'When investing in overseas property one should always look at the full tax implications that will apply throughout the investment period', advises Colm Murphy of Property Tax International (PTI). 'Not having the right tax information can mean the difference between making a substantial gain on the appreciation of the property or, in worst case scenarios, making a loss where a property has been held for some time and no taxes have been paid. An investor may be audited by the Revenue Commissioners here in Ireland and be liable for high penalties, surcharges and interest (sometimes as high as 300 per cent) in the overseas location once a tax liability has been found'.
'If you are in receipt of income from your property overseas you are obliged by law to declare that income to the Revenue as worldwide income and also in the foreign jurisdiction. Where a double taxation agreement is in place you will not pay taxes twice on the same income, although it should be noted that some DTAs only cover some areas of taxation, for example, capital gains tax is not covered under the agreement between- Ireland and France'.
Difficulties can arise when contact is made with the tax office directly or with a local tax advisor due to the obvious language barrier (similar to the problems faced by foreign nationals trying to deal with the Revenue if they have little or no English) making it difficult to understand what taxes are due, when and where they are to be paid and to whom. As a result, services offered by PTI include a complete international accounting service from pre- purchase tax advice to annual filing of tax returns in the foreign tax jurisdiction.