Undervaluing overseas property spawns jail risk

WARNINGS against putting a reduced value on overseas property deeds were issued this week by Overseas Property Law.

The practice of doing this to evade property tax or stamp duty could lead to a bill, fine and a possibility of landing in jail, the firm warned.

A warning was issued also in relation to revenue investigations which could lead to criminal prosecutions both here and abroad.

Overseas Property Law (OPL) managing director Catherine O’Sullivan, said: “Since the Revenue’s Offshore Assets Group launched an investigation into tax evasion in 2004 using accounts and financial products outside Ireland, more than 15,000 taxpayers made qualifying disclosures of offshore-related tax defaults, paying over €800 million in tax, interest and penalties.

“The under-declaration of income and gains earned from overseas property is widespread, therefore the Revenue are likely to specifically target Irish overseas property owners who’ve failed to meet their tax liabilities.”

The firm’s statement said although the full price for the property is included in the sales contract, individuals are being encouraged to include a reduced value on the purchase deed, on which the transfer tax will be paid.

The balance of the value of the property would then be paid in cash by the purchaser to the vendor.

This would seem to benefit the purchaser, as they pay less transfer tax, but the lack of traceability does increase the possibility of being defrauded.