IBRC mortgage sold to a possible Section 110 (S110) company

[argolis]

Apologies for the long post! I read an excellent article by Karl Deeter recently in the Sunday Business Post on the subject of IBRC mortgages now transferred to private companies. I was wondering if anyone else in the same situation had a view. (Paywalled source: [broken link removed]. Not sure if I'm allowed to post an image of the article from the paper?)

If you're in the situation where you're now paying your mortgage to a private holding company that is ultimately owned by a foreign entity, you may be supposed to withhold 20 per cent of the mortgage interest you're paying. If the company is a Section 110 (S110) shelf company designed to passively administer the "assets", there's no need to withhold the 20%. But Revenue won't tell you if the company you're paying is one and the company themselves probably won't either. If the company is one and ever has to chase borrowers in the courts, it could trigger removing this S110 status and then borrowers should start withholding the 20%. If a lot of borrowers do start legitimately withholding part of the payment, the company will probably jack up the interest rate to compensate for the lost income.

So if you withhold anything now, you'll obviously be considered by the company to be in arrears, even if it's legitimately done. If you don't withhold, and Revenue decide down the line that you should have, then you would be liable for that 20% built up over time i.e. you might eventually receive a massive tax bill.

My own mortgage is with Mars Capital Ireland, which I fairly sure this applies to. Although the mortgage rate has been reasonable so far, all I can see is that it's best to clear the mortgage asap through selling or remortgaging to avoid the future risk. Unfortunately, I'm not in a position to do that yet Is anyone else aware of this?

 

[argolis]

That is a very interesting supposition, which requires further investigating.

Well, since I posted that a lot of new stuff came to light. As the media found out and dined out on, all those companies are Section 110 and set up fake charities to own those S110 companies to avoid paying corporate taxes when funnelling the money abroad. For me and other mortgage holders, my take is that the government is allowing these companies to retain their S110 status, which means that I don't have to withhold anything and can continue with business as usual. Those companies will continue to make ridiculous money because of Noonan's ineffectual measures, so there's less risk of them jacking up the mortgage interest rates. And I'd imagine that it's a high profile enough situation that if there's any big changes affecting joe mortgage holder, it'll be made well known.

Personallly, I'll still like to be out from under their thumb asap because of the potential for future complications.

There's a lot of great information on the broader subject of these companies ripping off the Irish state, and the state allowing them to, on this thread:
http://www.thepropertypin.com/viewtopic.php?f=4&t=66282&start=255