The basis of all house purchase contracts in Ireland is the ‘Standard Incorporated Law Society’ contract (copies are obtainable from the Law Society of Ireland), which is revised from time to time (the one in use dates from 1995).
The particulars of the purchase (i.e. the address of the property, selling price, date of purchase, etc.) and any special conditions must be included in the contract, but its general conditions won’t usually need to be amended (unless there’s a major problem, such as planning permission not having been obtained).
If you’re buying a new property from a builder, there are also standard contracts that can be used, and there may be separate contracts for the purchase of the site and for the construction of the building. Note that, from the moment the signed contracts are exchanged, the sale becomes irrevocable.
Deposits
When you sign the contract for a new or resale property or a plot of land, you must pay a deposit. If you’re buying a resale or a new finished property (i.e. not off plan) you usually pay a deposit of 10 per cent when signing the contract (the actual amount may be negotiable), the balance being paid on completion when the deed of sale is signed.
Conditional Clauses
Most contracts, whether for new or resale properties, contain a number of conditional clauses that must be met to ensure the validity of the contract. Conditions usually apply to events beyond the control of either the vendor or buyer, although almost anything the buyer agrees with the vendor can be included in a contract. If any of the conditions aren’t met, the contract can be suspended or declared null and void, and the deposit returned.
However, if you decide to withdraw from purchase and aren’t covered by a clause in the contract, you’ll forfeit your deposit and could be compelled to go through with the purchase. Note that, if you’re buying anything from the vendor such as carpets, curtains or furniture, which are included in the purchase price, you should have them listed and attached as an addendum to the contract. Any fixtures and fittings present in a property when you view it (and agree to buy it) should still be there when you take possession, unless otherwise stated in the contract. In most cases, however, the contract will be conditional only upon the buyer obtaining the necessary mortgage and (if applicable) planning permission being obtained.
Inheritance & Capital Gains Tax
Before registering the title deed, carefully consider the tax and inheritance consequences for those in whose name the deed will be registered. Property can be registered in a single name, both names of a couple or joint buyers, the name or names of children, giving the parents sole use during their lifetime, or in the name of an Irish or foreign company. However you decide to register a property, it should be done at the time of purchase, as it will be more expensive (or even impossible) to change it later. Discuss the matter with your solicitor before signing a contract.
Buying Through a Company
It’s no longer possible to avoid Irish capital gains and inheritance tax by registering a property in the name of an offshore company, as land is regarded as a ‘qualified asset’, which is always taxable. If a property is owned by a company in a country which has a double taxation treaty with Ireland, you’ll pay the full amount of capital gains tax due in Ireland.
If the rate of CGT in your country of residence is higher than in Ireland, you’ll pay the difference in that country; if it’s lower, you won’t receive a refund! Buying an Irish property through an Irish company has advantages and disadvantages. You can save a considerable amount in stamp duty, but you may have to pay CGT or income tax on the increased value of your shares and, if the company has been running for some time and has a complicated financial history, you may have difficulty finding a buyer who’s willing to take it over. Before buying property through any sort of company, it’s essential to obtain expert legal advice.