Selling a property abroad? – You may have a tax liability closer to home as well!

Paying taxes on an overseas property sale does not exempt you from taxes in Ireland

With property prices beginning to rebound across Europe and beyond in recent times, many of those people who chose to invest in overseas property are now looking at cashing in on their investment.

Often people will recognise the need to pay taxes in the foreign country on any sale, but mistakenly assume that as you are paying taxes abroad there is no need to report the sale in Ireland.

If you dispose of a foreign property, and are tax resident in Ireland, you must pay Irish Capital Gains Tax on any gain or profit.

You are resident for tax purposes in Ireland for any year if:

  • You spend 183 days or more in Ireland in that year from 1 January – 31 December or,
  • If you spend 280 days or more in Ireland over a period of two consecutive tax years, you will be regarded as resident for the second tax year. For example, if you spend 140 days here in Year 1 and 150 days here in Year 2, you will be resident in Ireland for Year 2.

It is not just the sale of a property that can trigger a tax charge in Ireland.

If you give a gift of foreign property, you will have to pay CGT on the full market value of the property. The market value is the best price that you could sell your property for on the open market.

You may be able to deduct some or all of the foreign CGT you have paid when calculating how much Irish CGT you owe. The amount you can reduce your Irish tax by depends on whether Ireland has a Double Taxation Agreement (DTA) with the country that your property is located in.

If you pay more foreign CGT than Irish CGT, you can only claim a credit up to the amount of Irish CGT that you owe.

You can deduct a single annual exemption of €1,270 when calculating the amount of Irish CGT that you owe.

Selling or transferring any type of foreign asset can lead to quite complicated tax calculations and great care should be taken when ensuring that you are keeping your tax affairs in order. When conducting a sale in far away lands don’t forget your obligations closer to home!

By Michael Scanlan
Last updated December 2018

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