- Keep a record of all purchase costs – legal fees, transfer taxes, travel costs (in some countries), renovation costs etc. Some renovation costs may be deemed maintenance and allowed against rental income, others will be treated as ‘substantially altering the property’ in which case it will be added to the purchase costs for capital gains tax purposes.
- Where an annual write off of the purchase cost was given against rental income eg Germany, the cost base for CGT is reduced by the amount already claimed against rents over the period of ownership.
- Any foreign gains are also subject to Irish CGT. Where a DTA exists relief for foreign CGT will be given against Irish CGT on the same gain. However the calculation of the gain may vary to the foreign calculation eg where an annual write down of the purchase price was given in the foreign country, it will not have been allowed in Ireland against rents. Therefore the full purchase costs will be deducted in arriving at the taxable gain for Irish CGT purposes.
- Inheritance/gift tax rules vary per country. In many foreign countries transfers between husband & wife are not tax free as is the case in Ireland. The tax free thresholds and rates per country also vary. Specific tax advice should be sought.
- Some countries have roll-over relief when you sell a property and re-invest the proceeds in another property in the same country so enquire about such reliefs before selling.
Foreign PropertyTax Returns made easy at DG International Tax.