Returning to Ireland in 2019? Selling your property abroad

Tax questions on returning to Ireland - selling property abroad

Returning to Ireland in 2019? – Here’s what you need to know.

Tax is always a major concern for ex-pats thinking of returning to Ireland. In a special holiday season series, our tax department are sharing some of the common questions that we are frequently asked from people who are looking to return home.

Question #3: I have been living abroad for a number of years and am planning on returning to Ireland. I bought a property abroad and will sell the property before returning to Ireland. Will the proceeds be taxable when brought into Ireland? What about any money I have saved in my foreign bank account?

As an Irish citizen returning to Ireland, you will most likely be domiciled here and in consequence, on becoming Irish tax resident, will be subject to Irish tax on your worldwide income and gains.*

If you intend disposing of any foreign property (which is not your main home) before you return, it is advisable to do so prior to the year in which you become Irish tax resident.

If the property is disposed of in the year in which you resume Irish tax residency, you will be subject to Irish Capital Gains Tax on any gain arising on disposal. However, if you are disposing of your main home, you should be eligible for an exemption from Capital Gains Tax known as Principal Private Residence Relief.

Tax may also arise in the country where the property is located. Where tax is suffered in both jurisdictions, you should be entitled to claim Double Taxation Agreement relief provided Ireland has a tax treaty with that country.

If you are returning with a spouse or partner who is not Irish domiciled, they could avail of the remittance basis of taxation, whereby the disposal of a foreign property, not being their home, would remain outside the scope of Irish tax provided the disposal proceeds are not remitted to Ireland.

There may be tax planning opportunities whereby a property, which is not your main home, held jointly with your non-domiciled spouse could be transferred solely into their name before you both return to Ireland and make the disposal.

The tax implications of such a disposal in the foreign jurisdiction would also need to be considered. As members of Crowe Global, we can provide you with both Irish and foreign tax advice in this area.

Finally, remittances of cash reserves built up whilst abroad will not be subject to Irish tax if remitted prior to becoming Irish tax resident. For a non-domiciled spouse or partner, remittances of cash reserves even after they take up Irish tax residency will not be taxed in Ireland provided it can be shown that the remittance relates to cash reserves built up and not income earned on investments after becoming Irish tax resident. We recommend that cash reserves are transferred from your main bank account to a separate bank account before taking up Irish residency, so that these funds can be clearly identified for remittance purposes.

*Domicile is a concept of general law. It broadly means living in a country with the intention of living there permanently. Domicile is a much more permanent concept than residence. The domicile status of your non-domiciled spouse or partner should be reviewed on an on-going basis to ensure that they have not obtained a domicile of choice in Ireland which would exclude them from availing of the remittance basis.

Read the answers to the rest of our tax series on returning home:

Question #1: I’m planning on returning to Ireland midway through 2019. Will my foreign employment income be taxable in Ireland?

Question #2: I’m planning on returning to Ireland and taking up employment. I have been away for a number of years. How do I apply for tax credits?

Question #4: I am planning on buying a home when I return to Ireland. What are the taxes and reliefs available to me?

Question #5: I have made contributions to a foreign pension fund. Can I transfer these benefits back to Ireland?

Question #6: I paid social insurance contributions while living and working abroad. Will these contributions count towards qualifying for my Irish state pension?

Question #7: I am returning with a spouse / children who are not Irish citizens. What practical steps do I need to take in accessing benefits etc., for my family?

Question #8: I am moving to Ireland to work for an Irish subsidiary of my foreign employer. Am I entitled to any Irish tax reliefs or exemptions?

If you have any questions about returning to Ireland or any other personal tax issues, please contact a member of our tax team.