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Lenders have had a bonanza in providing commercial/investment mortgages during the current boom period.

Loans are available on property investment in both Ireland and overseas.

Most lenders base the interest rates on commercial mortgages on the Euribor European inter-bank base rate. Lenders usually charge a margin on the Euribor rate, depending on the risk to the bank associated with the individual deal and the cost of funds. It can vary from a fraction of 1 percent to as much as 3 percent.

Lenders also generally make a facility charge and that depends on the level of competition and financial strength of the borrower.

Under the Consumer Credit Act 1995, lenders must quote an annual percentage rate (APR) when advertising residential mortgages. However, this requirement does not apply to commercial mortgages.

The APR represents the overall cost of a loan.

In the 2002 Budget, the Government reversed measures that it had previously introduced to discourage investment in rented residential property, which was viewed as boosting the housing bubble.

In recent years, rentals from residential investments have not match outgoings and capital appreciation has been the primary incentive.

Tax Incentive Schemes

Urban Renewal Schemes were first introduced in October, 1985 to encourage renewal in rundown urban areas. Later a related Rural Renewal Scheme was introduced and tax incentives were provided for holiday home developments, car parks and nursing home investments.

The incentives are primarily tax-based and target investors in and occupiers of properties in designated areas. In the 2004 Budget, the Minister for Finance extended the deadline for completion of the schemes to July 31st 2006.

Political pressure resulted in a huge extension of the incentives during the Celtic Tiger property boom and the tax relief is available against rental income added about 20 per cent to the prices of apartments in Dublin 7 area in central Dublin where it was possible to compare similar properties where one development had the incentive. 

Most big earners invested in the tax incentivised properties and multimillionaires were able to pay zero tax on their income as a result.


State of Chassis: Artificial restriction on land supply puts Ireland and UK at bottom of property league in Developed World; Irish urbanisation at 4% is among Europe's lowest

Irish housing boom may boost public finances to €9bn this year; Government collects average of €100,000 in taxes from the cost of every new housing unit built in State


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