Investing in property through an SPV (Special Purpose Vehicle) is growing in popularity among Irish property investors. With the government looking to encourage more homes for rent with reforms such as the Vacant Homes Tax and various grants for upgrading old properties, becoming a landlord is looking more attractive—if you choose the right structure.
SPV’s & SPV Mortgages
Use a limited company (SPV) to purchase investment properties. Special Purpose Vehicles (SPVs) are an increasingly popular tool for property investors looking to maximise their returns while minimising risks and tax liabilities. By understanding how SPVs work and the unique advantages they offer, investors can make informed decisions that align with their financial goals. In this guide, we’ll explore everything you need to know about SPVs and SPV mortgages, particularly within the context of the Irish property market.
Property investment can be a lucrative venture, but navigating the complexities of ownership and taxation can often deter potential investors. This is where the concept of a Special Purpose Vehicle (SPV) comes into play.
What is an SPV?
An SPV (Special Purpose Vehicle) is simply a private limited company set up only to buy and rent out property — often referred to as a special purpose vehicle buy-to-let company.
- The property belongs to the company, not to an individual.
- This separation helps protect your personal assets and makes it easier to qualify for an SPV buy-to-let mortgage.
SPV Requirements
- Minimum of 1 Shareholder and Director
- Director Requirements:
- At least 1 director needs to be a Resident in Ireland
- Working and paying tax in Ireland
Unlimited number of shareholders from all nationalities can own an SPV for property investment.
How to Setup an SPV
- A Qualified Accountant will be required to set up an SPV.
- A Company name must be chosen and registered
- A Company bank account must be open
- Company Shareholders Names should be declared.
Taxation Benefits of SPVs
Taxation on profits – Corporation tax
You might also like our post on Buy To Let Vs Spv Mortgage: What Every Irish Property Investor Should Know.
- 25% on non-trading income Profits (e.g, Rental Income)
- 12.5% tax rate on trading profits (Profits from the sale of Property assets)
Director Loans into the company to fund deposit for house purchase;
Related read: Everything You Need To Know About Using A Spv Company For Buy To Let Property.
Director benefits:
- can be extracted tax free from SPV and paid back to director
- Interest can also be charged on Director loans
The SPV:
- Loan repayments are tax-deductible
- Interest Repayments are tax-deductible
Reducing Corporation Tax on Profits
Tax deductible expenses that reduce Corporation Tax;
- Pension contributions are permitted through revenue rules within an SPV
- Family members can be hired and paid a salary from the business
- Subsistence/Mileage can be paid from the company
- Director loan repayments and interest
- Pension Contributions
- Salaries of family members (up to €13k per annum very tax efficient per member)
Capital Acquisition Tax Planning using SPV’s
SPVs can be used as a method of passing assets onto family members and reducing/eliminating Capital acquisition tax liabilities (gift or inheritance)
Recommended: Ireland’S Best Spv Mortgage Experts – Money Maximising Advisor.
Examples: You might also like our post on Ireland Spv Tax Benefits: What Every Real Estate Investor Should Know.
- Making children 100% shareholders of the SPV, and you as the director with no shareholding
- Gifting €3000 worth of shares of SPV to your children each year until they own 100% the shareholding
Documents Required to set up an SPV
The following documentation must be provided for your SPV application
Company Name Details
- Your chosen company name (must be unique and approved by CRO).
Company Registered Office Address
- An official Irish address where CRO correspondence will be sent.
Anti Money Laundering Documentation for all Directors and shareholders
- A certified copy of a valid Passport or Driver’s License.
- Recent utility bill or bank Statement of the Company (usually within the last 3 months).
SPV Mortgages
Shareholders/directors of an SPV can apply for a mortgage through an SPV
Interested in SPVs or SPV mortgages? Enquire now about property investment opportunities tailored for Ireland.
- It is the SPV who is borrowing the money, not the individual
Conditions of an SPV Mortgage
Directors’ Requirements
- Minimum Salary of €40,000 (can be from combined director salaries)
- Between the ages of 21 and 70
Max Mortgage:
- 70% of the Property market value
Deposit Required:
- 30% of property purchase price (directors Loans/or loans from Subsidiary companies etc)
Term:
5–35 year period
Will lend to youngest Shareholders/directors 80th birthday
Interest Rate
- Variable rate – 5.35% to 5.85%
- 10-year interest-only option (rolling onto capital & interest afterwards)
- Capital and Interest option
Affordability:
Rent must equal 1.2 times mortgage repayments
- 0.85% when director has more than 1 Residential properties.
Individual Income not assessed so easier to qualify
- Affordability based on Property investment only:
Overpayment option
- No penalty to or limit to overpaying mortgage
Simplified Application process
- Individuals income and personal finances not assessed so a significant amount of paperwork is not required
Buy-to-Let Mortgage vs. SPV Mortgage
| Aspect | SPV Ownership | Personal BTL Ownership
|
|---|---|---|
| Ownership | Property is owned by a limited company (SPV) | Property is owned personally by the individual |
| Establishment | Company | Individual |
| Maximum Mortgage | 70% of Property Value | 70% of Property Value |
| Minimum Deposit | 30% of Property Value | 30% of Property Value |
| Transfer to Children | Shares in the company can be passed on | Property itself is inherited |
Buy-to-Let Mortgage vs. SPV Mortgage (Tax efficient: income & gains)
| Aspect | SPV Ownership | Personal BTL Ownership
|
|---|---|---|
| Tax on rental income | 25% corporate tax on non trading income and 12.5% tax on trading income | Income Tax on rental income If rental income is above 14k, the whole income is exposed to 50% tax |
| Mortgage interest | Deductible as business expense for SPV | Deductible from rental income for BTL |
| Pension contributions | Can contribute rental profits to pension (age-based limits apply) | Cannot use rental income for pension |
| Deposit extraction | Directors can show deposits as loan to the company, and withdraw them tax free, when profits are available, reducing tax liability | Deposits cannot be withdrawn unless property is sold out |
Pre Submission Documents required to apply for an SPV mortgage
Anti Money Laundering documentation
- Proof of ID
- Proof of address
- Proof of PPS number
- Proof of income
Self Employer/Directors
- 2 Years Certified Accounts (Financial Statement audited by your Accountant)
- 2 Years Form 11s & Chapter 4s (Proof Of Income)
- Tax Clearance Certificate (Letter From Accountant Confirming Tax affairs are up to date)
- Minimum 6 months Loan statements held by the company.
Employees
- Last 3 Payslips
- Last 2 years (EDS’s) Employment details summary (formerly known as p60)
- Signed Salary Cert from your employer
An up to date Credit Report (CCR) is required for all shareholders and directors.
Other Documents that may be Required
- Tenancy documents – if you are refinancing an investment property;
- Foreign Credit Checks – If you have lived in a different country in the last 5 years;
- Additional Loan Statements – If you are aware of any debts, that do not appear on the Central Credit Register report, 24 months statements required.
SPV Documents Required – Post AIP
The following are required at a later stage – post mortgage AIP
Ready to navigate the world of SPV mortgages? Book a consultation with our experts today.
SPV company related documents
- Certified copy of certificate of incorporation
- Certified copy of Memorandum of Articles of Association or Constitution.
- Copy of a recent SPV bank statement (only if existing SPV)
- These documents will be provided by your accountant once an SPV is set up.
Mortgage Process
- Submit pre-submission documents mentioned above
- Pre-submission Meeting
Review all documents
Create a cover letter
Submit to the provider - Post submission meeting;
Review AIP conditions
Order valuation,
Engage with Solicitor,
Set up SPV with Accountant,
Apply for Mortgage Protection
Find a property and put down a deposit, and send confirmation of address to us - Sign the Loan offer, transfer
- 30% deposit into SPV bank account
- Apply for house insurance and put in place
- Draw down your funds
FREQUENTLY ASKED QUESTIONS
1.What does SPV mean in mortgages?
An SPV mortgage is a special-purpose vehicle mortgage used by a limited company SPV to buy and manage investment properties. It lets investors hold property in a company name instead of personally.
2. What is an SPV mortgage?
A buy-to-let SPV mortgage allows a special-purpose vehicle company to purchase rental properties. The loan is in the company’s name, and repayments come from rental income.
3. What is the purpose of an SPV?
An SPV (Special Purpose Vehicle) is set up to own and manage property separately from personal finances, helping investors limit risk and manage SPV tax benefits.
4. What are the benefits of an SPV company?
An SPV property company protects personal assets, offers potential tax advantages, and makes it easier to grow a buy-to-let SPV portfolio.
Let us guide you through the benefits and process of securing an SPV mortgage. Book your consultation now.
5. What is an example of an SPV?
Curious about the benefits of an SPV mortgage for your next property purchase? Enquire with us today and take the first step.
An SPV for property investment is a company created to buy and rent out homes under a limited company SPV mortgage.
6. Who typically uses SPVs?
SPV property companies are mainly used by landlords and investors building or refinancing buy-to-let SPV mortgages.
7. How many investors can be in an SPV?
An SPV for property purchase can have one or several shareholders, depending on the company setup.
8. How do you set up an SPV company?
Setting up an SPV for buy-to-let involves registering a limited company, opening a business account, and applying for an SPV limited company mortgage through a broker or lender.
CONCLUSION
Understanding SPVs and SPV mortgages can unlock new opportunities for property investors. By setting up an SPV company, you gain access to potential tax benefits, asset protection, and enhanced borrowing capacity, which are crucial for building a successful property portfolio. This approach allows you to separate your investments from personal finances, making it easier to manage risk and grow your wealth strategically.
An in-depth grasp of how SPV companies operate is essential for maximising returns. From understanding what is an SPV in mortgage terms to navigating through limitations and applications, each aspect plays a significant role in your investment journey. Equipping yourself with this knowledge ensures that you make informed decisions tailored to your financial goals.
Success in property investment is about making informed, strategic decisions. To maximise returns and minimise risks, it’s crucial to thoroughly understand the nuances of SPVs and mortgage processes. With the right insights, investors can effectively navigate challenges and seize opportunities in the property market.
At Money Maximising Advisors, we provide expert guidance to help you optimise your property investment strategies. Our team is dedicated to supporting you every step of the way, ensuring you achieve your financial goals with confidence.
Get in touch with Money Maximising Advisors today for personalised advice tailored to your investment needs.
