My husband and I retired about three years ago and have very much enjoyed visiting Spain during the last few winters. We have started to think that we might actually like to own our own small apartment and live there during the winter months and visit at other times. Are there any tax implications we should consider before exploring the option of purchasing a second home in another country?
If you are buying a property abroad, it is important to take legal/tax advice in that country to understand the legal obligations and the tax obligations that may arise on the purchase/future sale and any ongoing taxes on property held in that country.
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You will remain Irish tax-resident once you spend 183 days in Ireland each year, or 280 days over two tax years (current and the previous year).
We recommend that you take advice to understand the tax treatment of the property on your death, and how best to deal with the assets through Irish and Spanish wills. Inheritance taxes will need to be considered in Ireland and Spain, and advice should therefore be sought to understand the future impact in both countries and any relief to be claimed.
RM Block
If you decide to rent out the property, any rental income earned from the property will be taxable in Ireland and we expect in Spain also, with relief provided through the double-taxation agreement between the two countries. Also, if you sell the property in the future, Irish and Spanish capital gains tax (CGT) may apply with relief provided through the double-taxation agreement.
Professional tax advice is essential to ensure compliance in both countries, and to claim relief for double tax where applicable.
Suzanne O’Neill is a tax partner at RSM Ireland
Do you have a query? Email propertyquestions@irishtimes.com
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