Buying and selling property in Ireland: What tax do you pay?

Buying and selling property in Ireland: What tax do you pay?

by | Nov 8, 2022 | Property

When you buy or sell a property in Ireland, there are a range of taxes and charges that you may have to pay. This can be confusing for many people, as the tax system in Ireland is not always as straightforward as we might like it to be. In this article, we will take a look at some of the most common taxes and charges associated with property transactions. First and foremost it is always important to seek professional advice when buying or selling property in Ireland, as there can be many complex tax implications you may not be aware of as well as other pitfalls an experienced professional can help you avoid. Seeking the advice of a great property solicitor who understands the taxation pitfalls in property transactions, like what we have here at Kevin O’Higgins Solicitors, can help you understand your tax liabilities arising from the buying or selling and, in some cases, can even minimise your liabilities. It is also important to consult with a solicitor to ensure that you have a clear understanding of the path ahead of you on your real estate journey. Read on to find out more and stay in the know!

Stamp Duty

The most important taxes to be aware of when buying or selling a property are stamp duty, Local Property Tax (LPT) and capital gains tax. Let’s begin with stamp duty. This is a tax which is levied by the government on all property transactions in Ireland and is chargeable only to the buyer of the property, not the seller. Even first time buyers have to pay stamp duty. More specifically speaking, stamp duty is a tax on certain written documents otherwise known as bearer instruments. This instrument is a document that constitutes the rights of the owner or holder of that instrument to the securities outlined.

Stamp duty applies to both residential and non-residential property, such as houses, apartments, land or housing sites, however, the stamp duty rates are different for residential and non-residential properties. Stamp duty is chargeable on instruments that transfer land and buildings situated in Ireland. Such instruments are usually called ‘Deeds of Transfer’ or ‘Deeds of Conveyance’.

Stamp duty is also chargeable on the following instruments:

  • leases for land and buildings in Ireland
  • Stock Transfer forms for Irish companies
  • instruments that transfer property as a gift
  • legal documents that state the ownership of property is being transferred or leased

As a general rule, the amount of stamp duty you have to pay depends on the value of the property being sold. For residential properties valued up to €1 million, the new rate is 1.0% of the full value. For residential properties valued over €1 million, the rate of 1.0% applies to the first €1 million and a rate of 2.0% applies to the balance. For example, if you are buying a residential property worth €500,000, the stamp duty you would have to pay would be €5,000. Whereas if you were to purchase a residential property for €1,500,000, the stamp duty owed would be €20,000 (1% on the first 1 million, equalling €10,000, and 2% on the remaining €500,000 balance, equalling an additional €10,000).

One thing to note for purchasers looking to buy new build residential properties, the rate of stamp duty owed is applied to the value of the property before VAT, VAT currently being charged at a rate of 13.5%.

While it is always beneficial to be as informed as possible, you need not worry about these types of calculations as a good property solicitor will take care of paying stamp duty costs on your behalf. For example, when calculating stamp duty on new builds, at Kevin O’Higgins Solicitors we will calculate your stamp duty costs, minus the price of VAT.

Local Property Tax

The second important tax to be aware of if you are purchasing property or properties is the Local Property Tax (LPT). This is a tax that is levied on all residential properties in Ireland, with the amount payable depending on the value of your property. The LPT is payable by the owner of the property and not the occupier. The LPT was first introduced in 2013 and replaced the household charge which was abolished from January of 2013 onward.

The Local Property Tax in Ireland is a self-assessed tax, which means that you as the taxpayer are responsible for estimating the value of your property yourself. For the years 2022–2025, the LPT is based on the value of your property on 1 November 2021. This is called the valuation date.

Local authorities have the ability to alter the basic LPT rate on residential properties in their area. These rates can be increased or decreased by up to 15%. This process is known as the local adjustment factor. Properties of equal value in different local authority areas may end up paying different rates of LPT depending on whether or not the local authority has applied a local adjustment factor or not. If you are researching LPT in the interest of locating desirable areas to purchase property here is a list of local authority LPT adjustments on revenue.ie. The Revenue.ie website also has a useful online LPT calculator that calculates the Local Property Tax of a property up to and including the local adjustment factor.

These taxes fall mainly in line with those  interested in purchasing property. When it comes to selling property there are a different set of factors to consider.

Capital Gains Tax

If you are selling real estate in Ireland you may be subject to Capital Gains Tax (CGT). CGT is a tax on the profit or gain you make when you sell certain assets. The amount of CGT you pay depends on whether the asset is classed as a chargeable asset, your CGT rate and how long you owned the asset for. Capital gains tax may apply if you:

  • sold one of your assets
  • exchanged one of your assets
  • gifted one of your assets
  • receive compensation from one of your assets

The date you sold, transferred or gifted the property will determine the date upon which you pay and file your CGT tax return. Interest will be charged on the return if you pay late and you are liable to pay a penalty. The transfer of a property between spouses or civil partners is exempt from CGT as is the transfer of a property from a parent to a child if it is to become the child’s principal place of residence. Another possible exemption from CGT may occur if you transfer a property that you once possessed as your primary place of residence. This tax relief is referred to as Principal Private Residence Relief.

There are some restrictions to this relief, including that you can only claim the relief for:

  • The period of time wherein you resided at the property
  • The actual value of the property as it currently stands, as opposed to the potential development value
  • The section of the house that was in use as your home

The standard rate of Capital Gains Tax is 33% however, depending on how much you have earned in a year and other such factors this rate may fluctuate. There are deductions allowed that you may be able to take advantage of to minimise the amount of CGT you pay. Any money you spent on the property that adds value to the asset can be deducted as an allowable expense. For example, if you renovate a kitchen or paint the interior of the property. Furthermore, any costs to acquire and dispose of the property can be deducted, for example any solicitor fees you may have accrued over the course of selling. You may also be able to deduct an allowable loss you made in the same tax year. The first €1,270 of taxable gains in a tax year are exempt from CGT. If you are married or in a civil partnership, this exemption is available to each spouse or civil partner but is not transferable.

As you can see the Irish taxation system is not always easy to manoeuvre. There are numerous pitfalls that may await any buyer or seller on the property market you wades in without being fully informed. While in this blog we discussed the largest most pressing taxes you may face there are other factors such as V.A.T and rental income tax, that may also come into play. The best way to avoid any stressful surprises is to consult with a legal professional who will guide you through the entire process.

Solicitors are not generally tax experts and at Kevin O’Higgins we don’t profess to be either. In matters of any complexity, one should always seek specialist advice. However, here Kevin O’Higgins we are experts at navigating the potential taxation pitfalls of your property transaction.

If you are thinking of buying or selling property and would like some more information on your tax obligations feel free to contact us now.

Franchising – Setting up your Own Business through a Franchise in Ireland

Franchising – Setting up your Own Business through a Franchise in Ireland

by | Oct 12, 2022 | Franchising

The first consideration one has to ask oneself when deciding whether to operate under the franchise business model in Ireland is to see if the country has the necessary and fertile economic circumstances. With a quick glance at data from the Irish Franchise Association, they declared that franchising in Ireland employed approximately 43,000 people in 2018. They subsequently reported in 2019 that approximately 44% of franchises in Ireland are of Irish origin. It is therefore evident that franchising provides a significant opportunity for investment in Ireland.

The idea of franchising, from the franchisor perspective, is to bolster an established business, operating under a registered business name, with an existing operational system, organisational structure and developed way of working with the aim of expanding the business further. From a franchisee perspective, franchising provides an attractive springboard to trade under a tried and tested, successful business model. In a nutshell, the franchisor receives the benefit of broadening their business, the franchisee inherits an attractive profit-making business model, while both are the recipients of a mutually beneficial working relationship. In this latest blog series from Kevin O’Higgins Solicitors, we will aim to explain the process of setting up your own business via a franchise in Ireland.

Why Franchise?

There are many questions that any potential franchisee must ask themselves if they wish to buy into a franchise. Is it the flexibility and independence of running your own business? Is it the desire to be your own boss but with the comfort of an already established brand and business model to lean on? Is it a purely money and profit-making undertaking? Have you identified a franchise that you admire and wish to partner with? The answer to these questions will to some degree dictate the type of franchise you seek to acquire.  For example, if you are seeking the comfort and brand recognition of an incredibly well known and established name, then a franchise such as a McDonalds or Dominos may be more suited to your needs. If on the other hand, you are seeking a more local, creative outlet, then researching a directory of prospective franchises in Ireland may be the place to start.

Once you have decided that franchising is the right business model for you, it is important to do your homework.  Buying into a franchise is a significant investment and one that should not be taken lightly.

The Steps to Setting up a Franchise in Ireland

Prior to initiating the first contact with a franchise, it is important to read and understand the Irish Franchise Association’s code of ethics. Adopted by both the Irish and British Franchise Associations from the European Court of Ethics for Franchising, it poses questions as to whether the franchise model is the right investment model for your business. Reading this code is not a legal requirement, but it does highlight the perspective of the various bodies surrounding franchising in Ireland.

Pre Contractual Disclosure

A Pre-Contractual Disclosure Document is required by European law to be provided by the franchisor to the franchisee, in order to allow the franchisee to make an informed decision as to whether the franchise is the right investment. Key disclosure issues that can be provided in advance of any binding contract/franchise agreement document being entered into could include, but is not limited to the following information:

– Details of the franchisor

– Their business model

– Any litigation they are currently involved in etc.

– How long it should be disclosed before the parties can sign the franchise agreement

– The interplay between disclosure and discussing commercial terms etc.

The Franchise Agreement in Ireland

The Franchise Agreement is the document that will bind both franchisor and franchisee together. It is important to seek professional legal advice, such as what we can offer at Kevin O’Higgins Solicitors, prior to signing this document as it will lay out the Franchisee’s obligations, the franchisor’s obligations and the basis of your working relationship going forward. Some key points that are generally laid out in a Franchise Agreement could include:

– The territory in which you can trade

– Exclusivity provisions

– Franchise fees

– Setting up of Franchise and financial obligations

– Duration of the Agreement

– Renewal provisions

– Termination rights etc.

Territory is a consequential step in the Franchise Agreement.  It is important to understand the territory in which you will be allowed to trade and also, any provisions that may be included surrounding non-competition.  For example, the franchisor may require that you do not open another franchise of their business within a certain radius of an existing franchise. This could have a serious impact on your business plans and it is, therefore, important to understand these provisions fully before committing to the Franchise Agreement. For example, under the Subway franchise model, there are no territory exclusions to prevent another prospective franchisee opening a store right next to yours.

Franchise fees are another element of the franchise agreement that are important to recognise. Franchise fees can be broken down into two categories, an initial franchise fee and an on-going royalty fee. The initial franchise fee is a one-off payment made by the franchisee to the franchisor in order for them to enter into the Franchise Agreement. This initial franchise fee is generally used by franchisors to cover the costs associated with providing you with training and support during the initial stages of setting up your franchise. The on-going royalty fee is a percentage of your turnover that you will be required to pay to the franchisor on a monthly or quarterly basis. The failure to adhere to agreed payments gives the franchisor the right to terminate the franchise agreement on an immediate or quick basis.

In addition, the duration of your franchise agreement is subject to continuing review and process.  Franchise agreements generally have an initial term of five years, with options to renew for a further five years. However, it is important to note that the franchisor has full discretion on whether to renew your Franchise Agreement and they are not obliged to provide you with a reason for their decision.

Once all of these decisions have been set out and agreed upon in the franchise agreement, the legal bedrock has been founded to undertake the full commencement and operation of the franchise business.

The Advantages and Disadvantages of Setting up a Franchise in Ireland

As is the case with the majority of professional and business decisions, there are pro’s and con’s to setting up a franchise in Ireland. We at Kevin O’ Higgins Solicitors would be more than happy to run you through the various intricacies of deciding on whether or not to franchise, but as a general overview, the advantages and disadvantages of franchising can be numerous:

Advantages:

– The Franchisee will have the right to use an established brand name which comes with all of the necessary marketing and goodwill that has been built up over the years.

– Franchisees will generally receive on-going support and training from the franchisor in all aspects of running their business.

– Franchisees will have the benefit of sharing ideas, best practices and advice with other franchisees in the network. This can lead to a Franchisee’s business being more efficient and profitable.

Disadvantages:

– Franchisees may be required to pay a high initial franchise fee which could limit their access to capital.

– Franchisees will have to adhere to strict guidelines and operating procedures that have been put in place by the franchisor. This could limit creativity, independence and innovation within the Franchise.

– Any reputational damage suffered by a different franchisee may affect your business.

– You may not have any control over the term limit of the franchise.

Franchising can be a great way to set up your own business, but it is important to understand all of the steps involved in setting Franchising can be a great way to set up your own business, but it is important to understand the various legal and financial implications before you sign on the dotted line. If you are a potential franchisee and would like more information on how to set up a franchise in Ireland, or if you are a franchisor who needs assistance with putting together a Franchise Agreement, please do not hesitate to contact us at Kevin O’Higgins solicitors. We would be more than happy to discuss your franchise query with you in further detail.

Wills and their Effect on Loved Ones: Making your Will with your family in mind

Wills and their Effect on Loved Ones: Making your Will with your family in mind

by | Sep 19, 2022 | Making a Will

For many, the process of making a Will can seem like a daunting task, something that people may end up putting off for years. This is understandable as dealing with a Will is tantamount to recognising that you may not always be around to provide for your loved ones. This is a difficult but important conversation that you should have with yourself and, more crucially, your family. It is never too early to begin this conversation and set about getting your affairs in order so that your family are well looked after in your absence. It is vital to open this discussion up to your family so that you may gauge their expectations and needs for the future.

This is where the assistance of a legal professional is vital. They will be able to provide you with the relevant information and advice specific to your situation so that you can make informed decisions regarding your Will. It is important to remember that a Will does not have to be set in stone, it can be changed and adapted throughout your life as your circumstances change and shift with the times.

Beginning the conversation is the most difficult step but, once the process is in motion, it will soon become apparent that you cannot put a price on the peace of mind granted by having a solid plan in place. In this blog post, we’ll guide you through the process of making a Will and what to keep in mind when crafting a Will to suit your family’s needs.

Benefits of a Will

Recent research has shown that only 30% of people in Ireland have made a Will.  Consequently, a very large number of people pass away without any Will in place. This can cause all sorts of legal difficulties for loved ones who are left behind. When somebody dies without a Will, they are said to have died intestate. As a result, the laws of intestacy determine how the deceased person’s estate is divided and can often lead to assets being distributed in a way that the deceased person would not have wanted. In Ireland the laws of intestacy are dictated by the Succession Act of 1965. Under this act, if a person dies without having made a Will, their estate shall be distributed in the following way:

– If the deceased was married or in a civil partnership at the time of their death, their spouse or civil partner will inherit the entire estate.

– If the deceased was not married or in a civil partnership but had children, their children will inherit the estate in equal shares.

– If the deceased had no spouse, civil partner or children, their parents would inherit the estate.

– If the deceased had no surviving close relatives, their brothers and sisters (or their descendants) will inherit the estate.

– If the deceased had no surviving close relatives, other relatives would inherit the estate.

– If the deceased had no close or distant relatives, their estate would go to the State.

Your vision for your family’s future may not align with the lines of distribution laid out by the Succession Act. It is clear from these laws around intestacy that having a Will in place gives you a much greater say in how your assets will be distributed when you die.

Probate

Upon your passing, your estate must enter a process known as “probate”. This is a legal process, handled by The Probate Office, that must be carried out before your assets can be handed over to your loved ones. Your estate must enter probate regardless of whether or not you have a Will in place, however, the probate process is made far more complicated and time-consuming where no Will was ever made.

When there is a Will in place, an application for a grant of probate must be made to ratify the Will and have the wishes of a Will carried out. In this instance, the executor of the Will will be entrusted with the responsibility of distributing the deceased’s estate in line with the wishes laid out in the Will. When a deceased person has passed away without a Will, an application for a grant of administration must be made. An “administrator” (generally a next of kin of the deceased), is put forward and becomes responsible for administering the distribution of the estate in accordance with the laws of intestacy.

In an intestacy situation the probate process can be more complex and time-consuming for your loved-ones. For example, a bond will be required for a sum equal to twice the gross assets of the estate. In a Will situation this is not required which, again, underscores the importance of having a Will in place.

Seeking out appropriate legal advice from an experienced solicitor when wishing to settle your affairs is crucial. Your solicitor will work with you to compile all the necessary information and documentation to help the whole process run as smoothly as possible.

Your Children and Your Will

Perhaps the most vital thing to consider when making a Will is how your children will be affected. If you die without a Will, your children may be left in the care of somebody you would not have chosen. This could be a grandparent, an aunt or uncle, or in extreme circumstances, the State.

When you write a Will, you can appoint legal guardians for your children. These are the people who will take care of your children if something happens to you and their other parent. You can also use your Will to leave money or property to your children. This can be done directly or through trusts. If you have young children, it is especially important to have a Will in place so that provision can be made for their maintenance and educational needs up to 18 years of age and thereafter. Any part of an estate that is to be left to a child as inheritance can not be claimed by that child until they reach the age of 18 – Succession Act, 1965. However, many parents opt in their Will to stipulate that their child or children should not benefit from inheritance until they are older – perhaps 23 or 25 years old. 

Defining Your Family

Nowadays, the word ‘family’ is flexible and can hold a different meaning for a lot of people. You might have a traditional family set up with a spouse and children. Or you might be in a same-sex relationship or be in a civil partnership. You might also be single or divorced. You might have stepchildren, foster children, or children from previous relationships.

No matter what your family looks like, it is important to consider them when making your Will. This includes not just your immediate family but also any extended family members who you wish to include in your Will.

Keeping your family and loved ones in mind should be at the heart of every major life decision, especially when it comes to making your Will. Making a Will gives you the opportunity to ensure everybody who is important to you is considered and acknowledged upon your passing.

 

Here at Kevin O’Higgins Solicitors, we have decades of experience in succession and probate law and would be happy to work with you to create the perfect Will to suit your circumstances. If you would like to begin the process of writing a Will or have any further questions please contact us today. We’re more than happy to help.

Selling a house in Ireland: What you need to know

Selling a house in Ireland: What you need to know

by | Jul 26, 2022 | Property

If you’re looking to sell your house in Ireland, there are a few things you need to know. The process of selling a house in Ireland can be tricky, so it’s important that you understand what’s involved before diving in head first. Unfortunately, the process isn’t quite as simple as putting a “For Sale” sign up and waiting for the offers to pour in. There are many things that must first be considered, from setting the right price to finding the right buyer. In this blog post, we will outline the steps involved in selling a house in Ireland and give you some tips on how to make the process as smooth as possible. We will also provide some tips on how to find the right professionals to aid in the transaction, as well as share some information on buying and selling a house at the same time, so that you have a fuller understanding of the Irish real estate market!

Selling a house in Ireland

Auction vs Private Treaty Sale

There are two ways to sell a house – by private treaty or by auction. A sale by private treaty is the type of property sale most of us would be familiar with. This is where the seller puts their house on the market and, usually via an auctioneer or estate agent, invites offers for the property. Sales by auction are where a vendor will list their house for sale in a specific auction. The vendor will set a reserve price for the property – the minimum amount they would be willing to accept for the property. From here, buyers at the auction will be able to openly bid on the property, with the house being sold to the individual with the highest offer. In contrast to a private treaty sale, buyers at an auction are expected to sign contracts of purchase then and there on the day of the auction.

A professional auctioneer or other expert in the area can advise you on how to sell your particular house. The best method depends on a number of factors including the type of house, the state of the property market, and the area, so it is best to consult an expert in the area for the best option for you. It is essential that you notify your solicitor of your plans to sell the house so that he can prepare the title documents and the contract.

Finding a Solicitor

One of the first and most important steps in selling your property is finding the right solicitor to aid you in the transaction. There are a few things to look for when choosing a solicitor, such as:

– A solicitor who has experience in selling houses
– A solicitor who is based in the area where you’re selling your house
– A solicitor who has long-standing relationships with other solicitors and professionals in the area who are likely to also be involved in the transaction.

When it comes to selling your home, your solicitor will be responsible for a number of tasks, such as:

– Drafting and negotiating the contract for sale
– Being responsible for your title deeds. If you have a mortgage, this will mean requesting your title deeds from your lender 
– Organising the transfer of ownership
– Calculating and paying the stamp duty on your behalf
– Submitting the Capital Gains Tax return on your behalf (if applicable)

Selling a house in Ireland is a big decision and, as such, there are a lot of things to consider before taking the plunge. With the help of a solicitor, you can be sure that all of the necessary steps are taken care of and that the process runs smoothly. Read our previous blog, Finding the Right Property Solicitor for Your Situation, to find out more about how to choose the right solicitor for you.

Contract for Sale

As soon as the solicitor has received all the necessary documentation from you and the lender, the contract for sale will be drafted. The solicitor leaves the purchaser and purchase price blank when preparing contracts for an auction sale until after the auction is over and the buyer is known. Prior to the auction, prospective bidders will want to review the title documents. If the sale is by private treaty the contract will contain all names including the purchase price. For private treaty sales, the contract for sale is not drawn up until after an offer has been accepted.

Setting the Right Price

A crucial step in selling a house in Ireland is to set the right price. For a private treaty sale, this is the asking price – a price set by the vendor as an indicator of what they expect to receive for the purchase. In an auction, this is the reserve price.

Pricing your home too high will result in it sitting on the market for a long time without any offers, while pricing it too low will mean that you’ll lose money on the sale. It’s important to find a happy medium, and the best way to do this is to consult with a local real estate agent. They will have a good understanding of the local market and can help you to set a competitive price for your home.

Hiring a Real-Estate Agent

While you can opt to sell your house privately, the vast majority of sales are done with the help of a real estate agent. An experienced real estate agent will be able to take care of many of the more time-consuming aspects of selling your home. They will value your property, photograph your home to ensure it’s looking its best, advertise and market your house for you and take care of any viewings. They will also coordinate the completion of the sale with your solicitor to ensure there are no legal loose ends.

One important thing to note before working with an estate agent is to ensure that they are registered with the Property Services Regulatory Authority (PSRA). All estate agents in Ireland must be registered with the PRSA. You can check this by searching their name on the PSRA website.

The final step in selling a house in Ireland is to complete the sale. This involves signing a contract with the buyer and transferring ownership of the property. Once the sale is complete, you’ll be able to collect your money and move on to your next home!

Buying and selling at the same time

The juggling of both buying and selling a house can be quite challenging if you want them to happen simultaneously. If you intend on completing such a transaction, it is important to work with a solicitor who has experience in handling such matters. It is possible to sign a contract for the purchase of your new house contingent on the sale of your old house going through. It is not necessary for either of these to go through at exactly the same time as there are many things that can go wrong.

Up until recently, it was possible to obtain bridging finance from a lending institution to cover the time period between the purchase of your new house and the sale of your previous house. However, such lending options are no longer available in Ireland.

Handling a transaction of this nature can be quite complex and complicated but working with an experienced firm, such as Kevin O’Higgins Solicitors, will ensure the process is carried out as hassle-free as possible.

Taxes involved in Selling a House

If you’re selling a house in Ireland, it’s important to be aware of the various taxes and fees that you’ll need to pay. The most common of these is stamp duty, which is a tax that is payable on all property transactions. The amount of stamp duty you’ll need to pay will depend on the value of your home as per the final sale price.

If you sell a house that is not your primary residence, you must pay Capital Gains Tax (CGT) on this sale. Generally, capital gains taxes do not apply to properties that are your primary residence. The general amount for CGT is 33% the sale price, however, the amount you will have to pay to the Revenue Commissioners can vary and you should speak to your solicitor to be advised upon the exact amount owed. This amount will vary according to the value of the property.

Other costs involved in selling your home include your real estate agent’s fee and your solicitor fees.

Sale Agreed v Sold

It’s important to understand the difference between ‘Sale Agreed’ and ‘Sold’. Sale agreed means that an offer has been made on your property and accepted by you, but the sale is not yet complete. Sale agreed is not legally binding and both you as the seller and the buyer may still pull out of the sale with no legal ramifications. Until the contracts are signed and the money has exchanged hands, the deal is not yet done.

In order for a sale to be complete, a contract for sale must be drawn up by the seller’s solicitor and signed by both parties and the agreed purchase price must be paid. Once this has happened, the property is officially sold.

The contract for sale will detail a number of important things, such as:

– The names of the buyer and seller
– The address of the property being sold
– A description of the property, such as the number of bedrooms and bathrooms
– The agreed purchase price
– The date on which the sale will be completed. This is known as the ‘closing date’.
– Any special conditions that have been agreed, such as the buyer being given a certain amount of time to arrange a mortgage.

It’s important to note that, once the contract for sale has been signed,  both parties are legally bound to go ahead with the sale. If the buyer pulls out of the sale, the vendor can forfeit  the deposit paid andmay also seek additional compensation for proven losses. Similarly, if the seller decides not to sell they may face legal action for losses incurred by the purchaser.

Conclusion

Selling a house in Ireland can be a daunting task, but with the help of a professional and some knowledge of the process, it can be a relatively smooth experience. Be sure to consult with both an auctioneer and solicitor to ensure that you are getting the best possible service. And don’t forget to factor in the various taxes and fees that you’ll need to pay. With a little preparation, selling your home in Ireland can be a breeze!

Please get in touch with us at Kevin O’Higgins Solicitors if you have any questions.

Buying property in Ireland: What you need to know

Buying property in Ireland: What you need to know

by | Jul 13, 2022 | Property

Buying property in Ireland: What you need to know

Are you thinking of buying a property in Ireland? If so, wrapping your head around the process involved is integral to ensuring the transaction  goes smoothly. For many people, buying a home or a new property will be one of the biggest financial decisions of their life. By informing yourself of all the need to know information before you embark on this journey, you put yourself in a position to make the transaction as pain free as possible. In this blog post, we will discuss some of the key things you need to know when buying property in Ireland. We will cover the importance of getting a property evaluated, the difference between “sale agreed” and “sold”, the different title situations that can arise, as well as some of the legal aspects involved in purchasing property. So, whether you’re a first-time buyer or an experienced investor, read on for more information!

Buying property in Ireland

If you’re thinking of buying property in Ireland, the first thing you need to do is figure out what your budget is so you can determine – (1) how much of a deposit you can afford, and, (2 ) your ability to afford the monthly mortgage repayments. This involves budgeting for all aspects of buying and owning a property such as mortgage costs, solicitor’s fees, insurance etc.

The amount you can borrow as a mortgage loan and how much you need to put down as a deposit is regulated by Central Bank lending limits. Currently in Ireland, the minimum amount you must put down as a deposit in order to receive a mortgage is 10% of the total price of the property you are looking to purchase. It’s important to get a mortgage pre-approval before you start looking at properties so that you know exactly how much you can spend.

Another important step in the process is to employ the help of an experienced and qualified conveyancing solicitor – a solicitor who specialises in the purchase and sale of property. There are many complicated legal processes and documentation involved in the purchase of any property – some of which will be discussed later – which can be very hard to navigate and understand without the aid of a professional. Working with a solicitor you trust will ensure the transaction is road mapped and carried out in as smoothly a manner as possible.

Surveying the property

The next step is to find a property that you like and that meets your needs and budget. Once you have found a property, it is important to get it evaluated by a professional before proceeding any further. While there are certain things that a seller must inform you on before a sale can be closed, there is no onus on the seller, their auctioneer or their solicitor to inform you of every aspect and detail of the property. There can be hidden problems with the property that you may not be aware of and an evaluation will help to identify any of these potential pitfalls.

Additionally, if you are still at the price negotiation stage, getting a property evaluated can give you an idea of what the property is actually worth. Going into any negotiation as informed as possible is always key to getting the best bang for your buck.

Any potential problems with the property, such as structural issues, title issues or dampness may be discovered. Once you have the evaluation, you can start negotiations with the seller, taking the findings of the survey into account when submitting your offer. You may also choose not to make an offer at this point.

Sale Agreed vs. Legal Sale

When you make an offer on a property and your offer is accepted, this is called a ‘sale agreed’ and is not legally binding. There is an agreement in principle to go through with the sale but either party can still back out at this point. To make it legal, you need to get to contract signing. When this is achieved both the buyer and the seller are legally bound to go through with the sale when they agree on the sale price of the property and both parties have signed the contract. The contract for sale will have been signed at this point with a deposit paid by the buyer. You can instruct your solicitor to start the legal process. The solicitor will investigate the title, planning , property taxes, local authority issues  and other documents to make sure that everything is in order before proceeding with the sale. If you are borrowing your solicitor will be checking in with your lender and dealing with their requirements.  They will also liaise with the seller’s solicitor to ensure that everything is going smoothly and all timelines are met. Once all the paperwork has been finalised, you will be ready to sign the contract and complete the purchase!

Title Situations

Something to be aware of when buying a home are the potential title situations that could exist regarding the property you are looking to purchase. In property law, the “title” refers to all of the property rights that belong to a proprietor of a specific property. Before purchasing a property, it is incredibly important to understand who actually owns the property and whether there are any outstanding debts or other rights on it.

This is another reason why it is so important to work with a solicitor when purchasing property. Your solicitor can complete checks regarding the title of your deserved property and advise you on anything of note. The language used in titles and deeds can often be very complicated and even archaic. Having an experienced solicitor who can explain these situations in layman’s terms can be invaluable.

If you’re buying a property with a mortgage, your lender will also do a search to make sure there are no problems with the title. There are two main types of title for properties in Ireland – freehold and leasehold. Freehold means that you own the property outright and are responsible for the upkeep and maintenance of the property. Leasehold means that you have a long-term lease on the property, typically for a period of 99 years, and are responsible for the upkeep of the property during that time. Additionally, generally speaking, with freehold possession you are said to own the building and land upon which the property is built, whereas with leasehold, you are only said to own the building. The type of title will be one of the factors you need to consider when purchasing a property.

Planning Permission

When purchasing a home, it is incredibly important to ensure that there are no planning issues with the property. The best way to do this is by working with an experienced conveyancing solicitor who knows what to look for.

There are many things that solicitors would refer to as planning issues. Examples would be things like homes being built with additional buildings such as garages that never received planning permission, extension being built on a property that never received planning permission, velux windows being installed in the front of a house that never received planning permission, attic conversions that are being used habitually with no planning permission received.

If issues such as these go undiscovered prior to purchase, they can become incredibly costly and can lead to unwanted stress, hassle and even litigation. Once you become the owner of a property, all pre-existing planning issues become your liability and your responsibility to rectify. If it is subsequently discovered that planning permission was required for a specific build on a property but was not requested or granted, the planning authority may require the works to be reversed at the expense of the current owner.

Contract for sale

Once you have a contract for sale, there are several important things to do before completion such as getting buildings insurance, arranging your mortgage finance if you haven’t already done so and booking a surveyor to assess the value of the property. You will also need to provide proof of identity and address to your solicitor as well as any other required documentation. Completion usually takes place four to six weeks after signing the contract for sale. Once everything has been finalised, you will be ready to move into your new home!

Bridging Funds

If you are planning to sell your home to buy another one, you can no longer take out what was known as a ‘bridging loan’ which was a sum of money used to cover the gap between two transactions on a short-term basis. You must have the funds readily available to purchase a new property. This may mean that you must sell your home first and then rent for a period until you have the necessary funds to buy another property. Dealing with the simultaneous sale and purchase of properties at the same time can be very stressful. Working with a solicitor with years of experience in these transactions, such as Kevin O’Higgins Solicitors, can make a difficult and complex transaction much easier.

Conclusion

There are many things to bear in mind when buying property in Ireland but, if you do your research and ensure you are well informed, it can be a relatively smooth process. Seeking advice and working with experienced legal professionals, such as Kevin O’Higgins Solicitors, will be paramount to ensuring a successful transaction.

We hope you found this blog post informative. If you have any questions or would like to know more about buying property in Ireland, please get in touch now via our contact page.

Thank you for reading!