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Ireland facts sheet on real estate property
Guidelines for Purchasing Residential Property in Ireland
Categories of Property In Ireland
Private residential property in Ireland falls into two principal categories:
1) Detached, semi-detached, terraced, on a freehold or leasehold site
2) Units in newly constructed blocks of apartments
The role of Estate Agents
Nowadays sales of property are conducted through estate agents but the odd property is sold by a private seller.
You can register with as many estate agents as you wish, either by phone, in person or on line. Estate agents require as much information as possible about the type of property you are looking for. An agent will not charge a prospective purchaser for their services but it is very important to realise that the agent always acts on behalf of the client vendor.
The vendor defrays all the expenses of the estate agent including advertising.
House Hunting
Estate agents will often send printed information sheets on prospective purchasers, the contents of which can also often be viewed on-line, and will conduct accompanied viewings of suitable properties. You will need to arrange viewings with the estate agent.
Arranging the Mortgage
It is advisable to get a mortgage agreed in principle as early as possible, as this will speed up your mortgage application. You can deal either directly with the lenders (banks and building societies) or through brokers who often have access to a wider variety of mortgages. Note that brokers may charge you a commission. Interest rates are at an all time low 3%-6% depending on type of mortgage. It is possible to have the rates locked to a fixed rate for several years but this usually involves extra cost
Making an Offer
Once you've found a suitable property, you can make an offer to the seller (usually via the relevant estate agent) verbally or in writing. Any offer, which can be lower or higher than the asking price, is subject to a contract being signed. There are no legal obligations on either side until the contract is exchanged and signed. and a deposit usually of 10% of the purchase price forwarded to the vendors solicitor, who will hold it pending the completion of sale which can take anything from 1 to 3 months.
The Legal Process
A solicitor will be required to represent you and handle the paperwork involved (known as the conveyance process). Both seller and purchaser will have to employ their own solicitors, who charge in the region of 1% of the purchase /selling price . Nowadays this is negotiable
The Contract
This is drawn up by the seller's solicitor and sent to your solicitor, who will raise some preliminary enquiries and make a Land Registry search and possibly a local authority search. These can be done by the purchaser but can take a lot of time.
Carrying out a Survey
It is hugely important that a survey is carried out on the property by a surveyor to identify any concealed structural defects and maybe estimate the value of the property. The purchaser is required to pay for the cost of the survey which sometimes can be significant and cost several hundred euro.
Taxation.
Mortgage interest relief for Owner-Occupiers and First-time Buyers:
Tax relief is available for mortgage interest paid, subject to certain limits. For the tax year ending 31 December 2004, the maximum available relief for a single person who is not a first time buyer is ?2,540 and for a married or widowed person, ?5,080. Where it is their first purchase, these figures are increased to ?4,000 for a single person and e 8,000 for married couples or a widower. These increased limits apply for the first seven years, thereafter the amounts fall back to ?2,540 and ?5,080 respectively.
The relief given is always at the standard rate which is 20%
Stamp Duty - Second Hand Homes
Stamp Duty is primarily a tax on documents. For the most part, these are documents used in the transfer of property or which create rights for the parties concerned. For example, when you purchase a second-hand house, stamp duty is chargeable on the conveyance document which transfers ownership to you.
The following rates of stamp duty are charged on second-hand residential properties for both first time-time buyers and owner-occupiers/ investors respectively:
First Time Buyers (Second-hand house)
Value of Transfer (?) Rate of Stamp Duty
?0 - 127,000 Exempt
?127,001-190,500 Exempt
?190,501 - 254,000 Exempt
?254,001 - 317,500 Exempt
?317,501 - 381,000 3%
?381,001 - 635,000 6%
>?635,001 9%
(These are the new rates as applied in Budget 2005)
Other Owner Occupiers/Investors
Value of Transfer (?) Rate of Stamp Duty
?0 - 127,000 Exempt
?127,001-190,500 3%
?190,501 - 254,000 4%
?254,001 - 317,500 5%
?317,501 - 381,000 6%
?381,001 - 635,000 7.5%
>?635,001 9%
The average price for a new house nationally is approx ?250,000 while the average price of a second hand house is approx ?259,000 but well located houses in large urban centers cost much more.
Tax relief on interest payments for Investors
With respect to investors, interest relief on monies borrowed to purchase or improve rented residential properties can be set off against tax on rental income .
Rent A Room Scheme
The "Rent A Room Scheme" was introduced by the Finance Act 2001. Its main aim was to increase the availability of rented residential accommodation and permitted a person to let a room (or rooms) in their principal private residence, with gross annual rental income of up to ?7,620 being exempt from tax.
Room rentals coming within the scope of this scheme will not trigger a clawback of any stamp duty relief, nor will it affect full entitlement to Capital Gains Tax principle private residence relief (in the event of a subsequent disposal of the property) nor full entitlement to mortgage interest relief.
Capital gains tax
Capital gains tax of 20% applies to all investment properties when sold. Indexation relief available up to last year has been abolished. This is likely to have serious consequences in years to come when investment properties come up for sale. Owner occupiers are however exempt from capital gains tax on the sale of their principal private residence.
Other taxes/ charges
Waste management charges are applied throughout the country and vary greatly depending on the volume of waste generated for disposal In Dublin the there is a standard charge for an average bin of ?80 and a charge of ?5every time the bin is emptied. This applies to both private houses and rented house but in converted rented houses the owner is responsible for passing the charge on to the tenants. Recycling of waste material is strongly encouraged and fines apply for failure to follow correct recycling procedures.
There is a charge of ?70 on each letting which has to be forwarded to the tenancy board by landlords but may be passed on to tenants.Disc parking for cars is now becoming widespread in larger urban areas with an annual charge of ?70 per car and a maximum of 3 cars per family but up to 4 cars are allowed in a converted house in flats with a maximum of one car per flat.
The author or the ipoa will not be liable for any damages, direct or indirect loss or any consequential loss or loss of business opportunities or projects, or loss of profits) howsoever arising and for the use or inability to use the article or any of its contents, or from any action or omission taken as a result of the article or any such contents.
Categories of Property In Ireland
Private residential property in Ireland falls into two principal categories:
1) Detached, semi-detached, terraced, on a freehold or leasehold site
2) Units in newly constructed blocks of apartments
The role of Estate Agents
Nowadays sales of property are conducted through estate agents but the odd property is sold by a private seller.
You can register with as many estate agents as you wish, either by phone, in person or on line. Estate agents require as much information as possible about the type of property you are looking for. An agent will not charge a prospective purchaser for their services but it is very important to realise that the agent always acts on behalf of the client vendor.
The vendor defrays all the expenses of the estate agent including advertising.
House Hunting
Estate agents will often send printed information sheets on prospective purchasers, the contents of which can also often be viewed on-line, and will conduct accompanied viewings of suitable properties. You will need to arrange viewings with the estate agent.
Arranging the Mortgage
It is advisable to get a mortgage agreed in principle as early as possible, as this will speed up your mortgage application. You can deal either directly with the lenders (banks and building societies) or through brokers who often have access to a wider variety of mortgages. Note that brokers may charge you a commission. Interest rates are at an all time low 3%-6% depending on type of mortgage. It is possible to have the rates locked to a fixed rate for several years but this usually involves extra cost
Making an Offer
Once you've found a suitable property, you can make an offer to the seller (usually via the relevant estate agent) verbally or in writing. Any offer, which can be lower or higher than the asking price, is subject to a contract being signed. There are no legal obligations on either side until the contract is exchanged and signed. and a deposit usually of 10% of the purchase price forwarded to the vendors solicitor, who will hold it pending the completion of sale which can take anything from 1 to 3 months.
The Legal Process
A solicitor will be required to represent you and handle the paperwork involved (known as the conveyance process). Both seller and purchaser will have to employ their own solicitors, who charge in the region of 1% of the purchase /selling price . Nowadays this is negotiable
The Contract
This is drawn up by the seller's solicitor and sent to your solicitor, who will raise some preliminary enquiries and make a Land Registry search and possibly a local authority search. These can be done by the purchaser but can take a lot of time.
Carrying out a Survey
It is hugely important that a survey is carried out on the property by a surveyor to identify any concealed structural defects and maybe estimate the value of the property. The purchaser is required to pay for the cost of the survey which sometimes can be significant and cost several hundred euro.
Taxation.
Mortgage interest relief for Owner-Occupiers and First-time Buyers:
Tax relief is available for mortgage interest paid, subject to certain limits. For the tax year ending 31 December 2004, the maximum available relief for a single person who is not a first time buyer is ?2,540 and for a married or widowed person, ?5,080. Where it is their first purchase, these figures are increased to ?4,000 for a single person and e 8,000 for married couples or a widower. These increased limits apply for the first seven years, thereafter the amounts fall back to ?2,540 and ?5,080 respectively.
The relief given is always at the standard rate which is 20%
Stamp Duty - Second Hand Homes
Stamp Duty is primarily a tax on documents. For the most part, these are documents used in the transfer of property or which create rights for the parties concerned. For example, when you purchase a second-hand house, stamp duty is chargeable on the conveyance document which transfers ownership to you.
The following rates of stamp duty are charged on second-hand residential properties for both first time-time buyers and owner-occupiers/ investors respectively:
First Time Buyers (Second-hand house)
Value of Transfer (?) Rate of Stamp Duty
?0 - 127,000 Exempt
?127,001-190,500 Exempt
?190,501 - 254,000 Exempt
?254,001 - 317,500 Exempt
?317,501 - 381,000 3%
?381,001 - 635,000 6%
>?635,001 9%
(These are the new rates as applied in Budget 2005)
Other Owner Occupiers/Investors
Value of Transfer (?) Rate of Stamp Duty
?0 - 127,000 Exempt
?127,001-190,500 3%
?190,501 - 254,000 4%
?254,001 - 317,500 5%
?317,501 - 381,000 6%
?381,001 - 635,000 7.5%
>?635,001 9%
The average price for a new house nationally is approx ?250,000 while the average price of a second hand house is approx ?259,000 but well located houses in large urban centers cost much more.
Tax relief on interest payments for Investors
With respect to investors, interest relief on monies borrowed to purchase or improve rented residential properties can be set off against tax on rental income .
Rent A Room Scheme
The "Rent A Room Scheme" was introduced by the Finance Act 2001. Its main aim was to increase the availability of rented residential accommodation and permitted a person to let a room (or rooms) in their principal private residence, with gross annual rental income of up to ?7,620 being exempt from tax.
Room rentals coming within the scope of this scheme will not trigger a clawback of any stamp duty relief, nor will it affect full entitlement to Capital Gains Tax principle private residence relief (in the event of a subsequent disposal of the property) nor full entitlement to mortgage interest relief.
Capital gains tax
Capital gains tax of 20% applies to all investment properties when sold. Indexation relief available up to last year has been abolished. This is likely to have serious consequences in years to come when investment properties come up for sale. Owner occupiers are however exempt from capital gains tax on the sale of their principal private residence.
Other taxes/ charges
Waste management charges are applied throughout the country and vary greatly depending on the volume of waste generated for disposal In Dublin the there is a standard charge for an average bin of ?80 and a charge of ?5every time the bin is emptied. This applies to both private houses and rented house but in converted rented houses the owner is responsible for passing the charge on to the tenants. Recycling of waste material is strongly encouraged and fines apply for failure to follow correct recycling procedures.
There is a charge of ?70 on each letting which has to be forwarded to the tenancy board by landlords but may be passed on to tenants.Disc parking for cars is now becoming widespread in larger urban areas with an annual charge of ?70 per car and a maximum of 3 cars per family but up to 4 cars are allowed in a converted house in flats with a maximum of one car per flat.
The author or the ipoa will not be liable for any damages, direct or indirect loss or any consequential loss or loss of business opportunities or projects, or loss of profits) howsoever arising and for the use or inability to use the article or any of its contents, or from any action or omission taken as a result of the article or any such contents.
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