The Investor 07.08
Leave Nothing to Chance
from The Investor
(July/August 2008)
Tom McGrath & Associates and Property Tax International have recently joined forces to provide professional legal and tax services to investors and holiday-home owners who are purchasing, or have already purchased properties abroad.
Would you invest in property in Ireland without professional legal and tax advice? The simple answer is no, yet according to Tom McGrath, managing partner at Tom McGrath & Associates Solicitors, it is astounding the number of people who have done exactly that and are suffering the consequences. "We get a large number of enquiries from clients who have been duped out of large sums of money, having signed documentation that they neither understood not had received any legal advice on," McGrath said.
This is also a concern when it comes to tax considerations, according to Colm Murphy, director of marketing at Property Tax International. "It's amazing the amount of people whoa acquire foreign property without carrying out the necessary amount of due diligence on their foreign property purchase or researching the possible tax implications that come with owning property overseas," he said. "It is important to remember that you are dealing with a completely foreign tax jurisdiction and if you don't properly research the market, you could find yourself paying more for the property at the outset and receiving less than you had budgeted for from rents and so forth as the necessary taxes were not accounted for."
"Investing in an overseas property is still a very worthwhile venture - be it for personal or investment purposes - provided that this is done properly," insist McGrath. "However, you should keep in mind that when you are buying in a foreign market, there are not only different tax and legal systems and possibly a different currency, there is most certainly a different culture."
Murphy adds, "There is a common misunderstanding among investors concerning the declaration of income. This arises where rental income is received abroad and investors declare the full amount only with the Revenue. Not only is this the most inefficient method for taxing this money, the investor is also not meeting their tax obligations abroad and could face penalties in the overseas country. Proper preparation with the right professional help can ensure investors' tax exposure is kept to a minimum."
The two firms are uniquely positioned to provide expert advice through their network of local associates, who are based in numerous countries around the world. Both McGrath and Murphy strongly advise anyone considering purchasing a property abroad as a holiday home or investment to take their time and to research the property and the market fully.
In an unregulated industry, it is important to exercise caution when listening to the enticing sales pitch of the estate agent. Be wary of the glossy brochures, they warn, and seek professional advice before committing to anything.