It is usually dumb to hold your PPR outside of your own name EXCEPT for high-end Dublin houses, where the inheritance tax alone, makes transferring it into the ownership of an offshore structure a no brainer (if you have money you should not have, all the better).
There are many many high-end Dublin houses held this way (with the owners still inside, and in good health).
Many Noel Smyth properties that came to market had such structures around them
There was a time in the 1990’s when the Irish Revenue were all over these types of these set-ups (probably post Ansbacker), but in the naughties, they seemed to stop perusing such cases / odd transactions (maybe the overall tax take was so big, they didn’t care).
"A house on exclusive Temple Gardens in Rathmines has sold in an off-market deal for €6.5 million – the highest price achieved for a residential property in Dublin in 2016 so far. St Dominic’s, 5 Temple Gardens, is a large detached redbrick house on about a third of an acre with an expansive north-facing rear garden. The property is the family home of the late barrister and former attorney general, Rory Brady, who died in 2010.
In spite of its many wonderful features, the house features an unsympathetic flat roofed two-storey rear extension and a large conservatory, both of which will likely be removed by the new owner as part of the practically inevitable refurbishment programme that buyers at this end tend to undertake.
Across the street, 23 Temple Gardens, the former home of ex-politician Liz O’Donnell, has been the subject of similar treatment after the house was purchased for €4.5 million in 2014. The house has undergone a lengthy refurbishment and a 1,000sq ft rear extension added.
The outcome is also pending on another recent sale on the road, that of Subiaco, 1 Temple Gardens. It came on the market asking €4.75 million, and sold so promptly it would indicate it sold for at or above the asking, though precise details have yet to emerge.
Meanwhile, Sunningwell, 7 Temple Gardens, a similar detached house to number 5, has failed to sell since coming on the market in 2014, even after a price drop last year to €3.95 million. While it is marginally narrower than 5 Temple Gardens, its reduced price now looks like a relative bargain compared to the recently achieved €6.5 million.
Temple Gardens has long been one of Dublin’s best addresses, attracting a who’s who of the professional classes, but the recent sale positions it well ahead of roads traditionally considered more desirable, such as nearby Temple Road and Dublin 4’s Ailesbury Road.
Despite its northerly orientation and the likely prospect of a full renovation, the sale of number 5 outprices even comparable properties on Shrewsbury Road, which less than a decade ago ranked as the sixth most expensive road in the world."
FROM: Editor of Irish Times
TO: No-name Irish Times Property Dept.
Dear No-name Irish Times Property Dept(*).
We all understand that without Property advertising (commercial and residential), the Irish Times would be insolvent.
However, we must also understand we dodged a huge bullet in not being held culpable for colluding in ramping property prices during the naughties, and almost bankrupting the Irish nation (the state in which our readers reside). Remember our constant “plant” articles about “supply shortages”, “loads of cash in the system”, “canny buyers ‘snapping up’ 7m houses”, sale prices of “about 3m” when it sold for 2.35m, why Ireland’s real estate fundamentals are “solid / sound / firm / robust etc.” based on “affordability” (whatever that meant). It is ironic - and a complete accident - that we published an article by Dr. Morgan Kelly (which we worked night and day to discredit afterwards), that probably saved our bacon here. We may not be so lucky again.
In this regard, I have read the attached piece which I know was ghost written by a lady in Sherry Fitzgerald. While we are still held over a barrel by Irish property agents, we cannot allow such s*e to be printed again in our paper. If you use an online tool called “myhome.ie”, you will see that around the corner from 5 Temple Gardens, is High Cross Temple Road. High Cross a better road, better + bigger house (1.5x size), better internal condition, much bigger site site (4x), and much better site aspect (fully south vs. fully north facing) and almost asking the same as 5 Temple Gardens (and has been for a while now). And if that is too much analysis for you, we have the next door 7 Temple Gardens, with an almost identical site size, identical house size, identical house condition, and identical aspect, rotting on myhome.ie for years now at UNDER 4m. In addition, every fking ejiit in Dublin property knows that 1 Temple Gardens had a superb +1.25m re-fit vs 5 or 7 Temple Gardens and got the “walk-in” price (which this lady also knows precisely, but reporting the price does not suit her spin, so she leaves it hanging).
It is not that I am looking for Woodward & Bernstein, or even god forbid, Cagney & Lacy, in terms of investigation (in fairness, the buttons that we pay you would not merit it), however I do expect you to do some f*****g work.
You might actually protect this lady in Sherry Fitzgerald from her own stupidity in trying to spin potential tax planning (c. +2m worth), now that we are 5 full calendar years past the deceased of the original owner (as KPMG / PWC will advise you).
In the 0.001% chance that this “transaction” was not tax / estate planning driven, then we need, as journalists, proof from her as to the provenance of the buyer, and why they paid such an incredible premium for a fully, and very modest, north facing garden (i.e. there is nothing “must have” about 5 Temple Gardens, in the way that there was about say Milverton in Herbert Park.)
I know that she was rattled, having sold 45 Sandford Terrace quickly for only a tiny margin over 47 Standford Terrace (despite 45 being worth more than 47), and I know that she got another spin article beside 5 Temple Gardens, to defend this price and spin it as a “strengthening” of pricing (even though it was a weaker price).
But for f**ks sake, we are only a Fintan O’Toole away from ending up as the Irish Independent. Do you want to spend the rest of your journalistic career writing attack articles on non-FF/FG politicians, re-interpreting Bertie (not Brian yet) as a mis-understood / unlucky visionary, or developing total journalistic amnesia over any outcome of a tribunal and the actions of parties disclosed within. Say good-bye to any involvement in the ICIJ and any future “Panama Papers” gigs. We may never have a Government who will prosecute the likes of Flannery or Lowry for tax or vat evasion (yes Frank, we saw that trick with Rehab on vat), but that does not mean we cannot at least give our readers the small victory of reporting it.
Next time that lady from Sherry Fitzgerald wants to use our paper for her spin, tell her the fax machine was broken.
And then go an smash it against the floor.
(*) Because nobody in the Dept had the guts to put their name to the piece in question.
Hard to believe that c. 1m of inheritance tax and another 1m of future CGT has been so easily managed.
(and by the family of the ex-AG).
I think they will be very annoyed at [snippedy snip snip] highlighting the “transaction” even more.
(she was probably annoyed that they did not involve her in the “valuation” used for stamp duty etc. and got a bit desperate given how poorly the sale of 45 Sandford Road went vs. 47 Sandford Road, and anyway, going for such a mad figure like 6.5m in the era of the PPR is really asking for trouble).
Have checked with all main agents and nobody knows anything about this (and are equally shocked at the price).
They all know who are in the market for this kind of house (a tiny handful) and none have bought this.
There is also another - and better - house on Temple Gardens being discretely offered, but a lot lower than 6.5m
As I said above, there was a time post Ansbacher when the Irish Revenue were very alert to these type of inheritance tax planning schemes (they even started going along major roads to check the ownership structures one-by-one), but for some reason, they are not that interested any more (hence the structures that Noel Smyth had around his Ailesbury Road house.). Perhaps the reduction in CGT to 20% made the costs of investigation less worthwhile?
I think there will be more press on this to imply a real bidder had come forth (i.e. “senior sources within the industry confirmed that …”) and make sure that it does not accelerate any further media attention (the Irish Times have compromised themselves and need to shore this up), however it will just lie dormant until the beneficiaries are ready to sell in the years to come (i.e. “same sources implied that the new owner is abroad, and will not use the house immediately”).
Hi observer35. It still isn’t clear to me where the tax advantage is selling the asset at an inflated price. How exactly is the asset “washed” of tax liability after five years as mentioned in your proves posts?
In simplified terms, there are three main steps here:
Transfer house into an offshore trust.
(would have been done a long time ago, or at least pre PPR, and at the lowest price, to save stamp duty).
(note that it hard to undo / reverse this transaction, so it is only recommended if the owner will hold the house until death).
Later on, pass ownership of the trust to the beneficiaries at same price (no tax implications here).
(there is more structuring that can “shield” the beneficiaries from their ownership of this trust, if they need it).
After +5 years, beneficiaries buy the house out of the trust, and back into their own personal ownership.
(you want to do this one at the highest price possible price so as to minimize future CGT when they eventually sell it).
(there are several techniques for the trust getting paid by the beneficiaries for this transaction without “cash” changing hands).
(note that it is important for items not mentioned in 2. regarding “shielding” that it is at least 5 years).
And viola - the beneficiaries end up avoiding inheritance tax AND even future CGT on any price over the inflated price.
A favorite structure of “legal types” in Ireland for protecting the “big house” for the next generation.
(also featured in Gail Killilea’s buy-out of Walford from trust Sean and herself had held it in - and also done at “full” price).
(although, not as mad a 5 Temple Gardens price, which was just bringing too much attention to it.).
I still don’t know how this works. Lets say this house house is probably really worth €4m. Who ever pays €6.5m for it in this market, will it not be seen that they gave the vendors a gift of €2.5m and be subject to gift tax?
They are buying it off themselves to take it out of a non domiciled trust structure (which they own) and back into their own direct hands. No physical cash changed hands (although the stamp duty is a real cash cost). There is no tax incurred in the non-domiciled trust structure.
The key is to buy it back at the highest base cost possible, so that if you eventually sell for say 6m in ten years time to a genuine 3rd party, you incur no real Irish CGT.
We had another house in Ailesbury Road appear on the register with the same technique (and regularly appears in SF “valuation” reports to buyers etc.)
Much more powerful technique than the “loopholes”, and particularly if you can set up and administer the trust structures yourself. Not only can you bypass inheritance tax, but you can also bypass future CGT as well.
Madeleine Lyons in the IT presented these prices as if they are real because two houses were actually on the market:
number 17, Northcote, which went on the market last year seeking €4.5 million…Following a price drop to €3.95 million it’s understood the rambling 340sq m (3,660sq ft) redbrick closed in recent weeks for a figure close to this sum.
Fortunately for the buyer, the actual price was €3.5 million which is €350,000 short of the reduced asking price but that’s “close to asking” when you’re in this rarified atmosphere
The house next door, No. 16 Kilfenora, had an asking price of 2.95 Million and has recently gone sale agreed. Hard to stomach the thought that anyone could steal one of these precious jewels for less than 3 Million.