SPV MORTGAGES

Use a limited company (SPV) to purchase investment properties

Benefits of an SPV

  • More tax-efficient than owning property in your own name
  • Protects your personal money if something goes wrong
  • Easier to qualify for finance/mortgage for property purchases
  • More suited to Property investors looking to grow their portfolio
  • Very tax efficient for extracting profits from property purchases and sales
  • Can be used as a Succession Tax planning tool to pass assets to children
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What is an SPV?

  • An SPV (Special Purpose Vehicle) is simply a private limited company set up only to buy and rent out property.
  • The property belongs to the company, not to an individual.

This separation helps protect your personal assets.

SPV Requirements

  • Minimum of 1 Shareholder and Director

 Director Requirements;

◦At least 1 director needs to be Resident in Ireland

◦Working and paying tax in Ireland

 Unlimited number of shareholders from all Nationalities

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Director Loans into the company to fund deposit for house purchase

  • 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 deductabl

  -Interest Repayments are tax deductible

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Reducing Corporation Tax on Profits

Tax deductible expenses that reduce Corporation Tax

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Pension contributions are permitted through revenue rules within an SPV

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Family members can be hired and paid a salary from the business

3

Subsistence/Mileage can be paid from the company

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Director loan repayments and interest

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Pension Contributions

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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 reduce/eliminate Capital acquisition tax liabilities (gift or inheritances)

Examples

  • 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% of 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
  • Recent utility bill or bank Statement of the Company (usually within the last 3 months).
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SPV Mortgages

  • Shareholders/directors of an SPV can apply for a mortgage through an SPV
  • It is the SPV who is borrowing the money, not the individual
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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

Term

  • 5–35 year period
  • Will Lend to youngest Shareholders/ directors 80th birthday

Deposit Required

30% of property purchase price (directors Loans/or loans from Subsidiary companies etc)

Max Mortgage

  • 70% of the Property market value.

Simplified Application process

  • Individuals income and personal finances not assessed so a significant amount of paperwork is not required

Overpayment option

No penalty to or limit to overpaying mortgage

Interest Rate

  • Variable rate – 5.35% to 5.85%
  • 10 year interest Only option (rolling onto capital & interest afterwards)
  • Capital and Interest option

Affordability based on Property investment only

  • Rent must equal 1.2 times mortgage repayments
  • 85% when director has more than 1 Residential properties.

Individual Income not assessed so easier to qualify

Buy-to-Let Mortgage vs. SPV Mortgage

spv mortgage

Buy-to-Let Mortgage vs. SPV Mortgage

Tax efficient (income & gains)

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Pre Submission Documents required to apply for an SPV mortgage

1 ) Anti Money Laundering documentation

  • Proof of ID
  • Proof of address
  • Proof of PPS number

    2) An up to date Credit Report (CCR) is required for all shareholders and directors

3) 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

Other Documents that may be Required

The following documents may be required in certain circumstances;

  • 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.
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SPV Documents Required – Post AIP

The following are required at a later stage – post mortgage AIP

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

  1. Submit Pre submission documents docs mentioned above.

  2. Pre submission Meeting

    1. Review all documents

    2. create cover letter

    3. submit to provider

3. Post submission meeting;

1. Review AIP conditions

2. Order valuation,

3. Engage with Solicitor,

4. Set up SPV with Accountant,

5. Apply for Mortgage Protection

6. Find property and put down deposit and send confirmation of address to us

  1. Sign Loan offer, transfer

  2. 30% deposit into SPV bank account

  3. Apply for house insurance and put in place

  4. Draw down your funds

Recommended Solicitors & Accountants

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