Property Investment – Ireland

Property Investment in Ireland

Below is a quick guide to property investment in Ireland. It will cover the procedure for purchasing a property in Ireland, how rental income is taxed in Ireland, how capital gains are treated, and much more.

Rental Income and Tax

Rental income is earned from letting a house, flat, apartment, office, building etc.  Income from easements is also classified as rental income, i.e. if payment is received for the right to erect advertising signs, communication transmitters, conacre or grazing rights.

The following is a list of legitimate property related expenses that are allowable deductions from gross rent.

  • Ground Rent
  • Rates
  • Maintenance
  • General Repairs (Capital Expenditure excluded)
  • Insurance
  • Management Fees:  paid to an agent e.g. rent collection.            Note: Landlords may not claim for their own labour.
  • Service charges (water/refuse etc.)
  • Advertising for tenants
  • Accountants fees for preparing rental accounts 96/97 onwards.
  • Wear and Tear – Depreciation of furniture and fittings
    Allowance is 12.5% per year over 8 years.
  • Building Expenditure – in a Renewal incentive area
  • Interest – Relief is due for 75% of interest paid on loans to purchase, improve or repair a residential premises (some exceptions).

Much more detail on the tax treatment of rental income is available on the Irish Revenue website here.  A Revenue Guide to Rental Income – IT 70

Stamp Duty

Stamp duty in Ireland is charged at a rate of 1% on residential properties up to the value of €1,000,000. 2% stamp duty is charged on the balance above the €1,000,000 threshold.

Stamp duty is charged at a flat rate of 2% on all commercial properties.

A company can operate as a holding company of a property and therefore the transfer of Irish shares is charged at a rate of 1%.

Property Investment Risk

There are many risks inherent in investing generally but also a few risks that are more specific to property investment. These include but are not limited too the following.

  • Market risk
  • Default risk
  • Inflation risk
  • Social/political/legislation risk
  • Liquidity risk
  • Tax risk
  • Business risk

There is a further discussion of property investment risk here.

More details on property investment in Ireland will be added to this page shortly.