Sunday 18 November 2018

'I'm living abroad but want to return to Ireland in a few years. Do I buy in Europe or at home?'

(Stock photo)
(Stock photo)

Jim Hegarty

All your consumer questions answered.

Question: I'm living and working abroad in Europe and I've saved up enough for a deposit for an apartment. I have a permanent job here, but I see myself moving home to Ireland in a few years.

I've heard a lot of horror stories from home about huge deposits needed and crazy bidding wars on substandard property - so at the moment buying here in Europe makes a lot more sense.

My question is about the first-time buyer initiative in Ireland (that is, the Help-to-Buy scheme). Would I lose out on that if I bought here in Europe - and if I would, how big of a loss would that be?

As I'm not paying tax in Ireland at the moment, if I moved home would I even be able to avail of the help-to-buy scheme? (I did pay tax for a few years after university).

Also, if I moved home after buying an apartment in Europe, and rented out the apartment here, would I pay tax on the rental income - if it's just covering the mortgage?

Finally, the Capital Gains Tax (CGT) is much lower here than at home, so if I bought an apartment here, moved home, and then sold the apartment, which country's tax would I fall under (that is, which country's CGT would I need to pay)?

Am I better off continuing to save instead of buying an apartment here in Europe - to avoid causing a lot of problems when I move home.

Answer: As you are not living in Ireland at present, you would not be eligible to benefit from the Help-to-Buy (HTB) scheme.

The HTB scheme is of no benefit to you whether you purchase a property in Europe or not. In the event you did move back to Ireland, as you have not been paying tax here for the past four years, you do not qualify for the HTB scheme.

If you purchased an apartment anywhere in Europe, you would be subject to the local tax rules of that country concerning the tax you pay.

In relation to Capital Gains Tax, if you purchased an apartment in Europe, you would be subject to the country's local tax rules.

One thing to bear in mind if you do purchase an apartment abroad is that you would not be considered a first-time buyer if you decided to return to Ireland in the future.

This means you would not be able to take up any tax breaks or house-buyer support which might be available to first-time buyers at the time you buy in Ireland.

As regards getting a mortgage to buy a property while you are living abroad, not all the banks here in Ireland can facilitate you. But of the banks that can, they have certain criteria you must meet.

You would be required to put down a minimum deposit of 30pc of the purchase price. You would be subject to the normal lending terms of a maximum of three-and-a-half times your annual salary and the maximum term of 25 years - up to the age of 65.

Jim Hegarty is Director and advisor at Hegarty Financial  Management (hegarty.ie)

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