Tax query re purchase of overseas property

I would appreciate if anyone could let me know whether you can claim tax relief in Ireland on money borrowed (as a top-up mortgage on PPR) to purchase an overseas investment?

Yes
BUt make sure not to claim TRS (tax relief at source) on the same top up

stuart@buyingtolet.ie

Stuart, I'm puzzled. How can you claim tax relief in Ireland on the mortgage interest if you don't claim tax relief at source?

im buying an appartment in Budapest this year. Im signing on the dotted line in march 2006 with 20% of the price and no more has to be paid until late 2007. I have the deposit to cover the 20% and im thinking of releasing equity from my own house (which is already paid for) to finance the price of the appartment.Im buying as a private individual in Budapest so i can't claim any expences over there but the tax office informs me that i can claim any expences in Ireland relating to the property in Hungary. under double taxation rules i can claim the same expences as i would in ireland. When i release equity from my house with the first active bank my understanding would be that i cant claim mortgage interest relief on my investment property as it isnt my principal residence so how can i claim it otherwise or can i claim it as an expence when im filing my irish taxes what way does this work as im new to all this legal and financial jargon and i would appreciate any advice given

Seanieboy,

You have posted the same query 4 times. I have now deleted the other three.

Thanks,

Sueellen.

Hi Seanie - Have you checked out your Hungarian tax liability and built this into your calculations?

Andrewa said:

Stuart, I'm puzzled. How can you claim tax relief in Ireland on the mortgage interest if you don't claim tax relief at source?

Click to expand...

If it is an investment property then there should be rental income
Any interest on money borrowed for the purchase of the property can be offset against the income received when calculating the taxable income

TRS should not be claimed on money borrowed for investment properties whether the proeprty is in Ireland or elsewhere

stuart@buyingtolet.ie

from what i can understand in this forum is that the equity that i release on my paid principal residence to pay for my budapest appartment cant be claimed as mortgage interest relief in ireland but can be offset against rental expences in budapes would i be right or wrong saying this?

Seanieboy,

You'ill need to get an agent in Budapest to sort out your tax liabilities over there!

I don't know if you're purchasing through a company or as an individual. I'll presume you purchased as an individual.

There is a flat tax in Budapest of 25% on your rental income. I don't believe you can make any deductions for expenses etc in Budapest..you pay the 25%!

The good news is that your tax liability in Ireland will be small, if anything at all. YOu can dedect the normal expenses and capital allowances similiar to an Irish property (including the interest on the mortgage used to purchase the property). Due to the double taxation in place with Hungary the tax already paid in Hungary can be deducted from your rental profit in Ireland.

Thanks don you cleared up a few things my dealings so far have been ok over there .The only thing is that releasing equity from my house over here in ireland. you see don im borrowing from an irish bank to pay for a Hungarian property and i can't see them giving me relief to release equity from my house to buy property over there because equity released from the house is only for renovation and restoration of youre principal residence if im wrong please correct me regards
Seánie

Seanie,

That's no problem.

You can use equity release on your principle private residence in Ireland to pay for a property in Hungary.

You have to make sure that your bank in ireland does not give you tax relief at source for the portion of the mortgage you are using to purchase the Hungarian property.

Irish revenue will allow you to deduct the interest on the portion of the mortgage(ie the equity you released) you used to purchase the Hungarian property from your rental Income when calculaing your tax liability in Ireland.

revenue do not care what you have to say to your bank in order for you to get an equity release from them. revenue are only interested in what you use the money for!

I'd be very surprised if a Bank in today's climate would only let you release equity to refurbish your PPR

If you search through some of the treads I've written on over the last few months you'ill get more information on this topic from my contributions and contributions of others.

I hope the above is helpful