DOMAINE DE PLAISANCE
THE DIFFERENCE BETWEEN RES, IRS AND IHS?
The Mauritius real estate market has been growing steadily for a number of years. Since 2001 the Mauritian government has put in place laws to regulate this market and open it to foreign investors. This has spawned a multitude of real estate projects, considered as references in their category of upscale RES residences.
The 3 different legal regimes proposed to the foreign investor in order to have a better understanding of the Mauritian real estate market have been detailed just to give you a better overview. In addition to the real estate schemes that allow to invest serenely, the taxation of Mauritius is a major asset, which will convince you.
A first important precision these plans do not in any way close the door to the Mauritian buyers. On the other hand, these are the only programs that allow the acquisition by a foreign buyer on Mauritian soil.
The IRS (Integrated Resort Scheme)
The IRS is the first such regime set up by the Mauritian government in association with the Board of Investment. The implementation of the IRS in 2001 was intended to facilitate the arrival of foreigners on the Mauritian soil through the purchase of luxury villas. Buying an IRS property allows non-Mauritians to acquire a property in full ownership. For this purpose the real estate in question must meet certain criteria established by the government of Mauritius and BOI:
- The minimum price for the IRS property is $ 500,000 USD
- The future owner must pay a government tax of USD 50,000 (or 5% of the value of the property)
- The land in the entire complex must exceed 10 hectares
The advantage for the foreign buyer is the automatic obtaining of a residence permit throughout the period of possession of the property on the Mauritian soil.
The brake of these real estate developments sold under the IRS legal framework is that they are complexes dedicated to a certain elite because the price charged is on average around a million euros of investment.
THE RES (Real Estate Scheme)
The RES system was introduced in 2007 to open up the market to foreigners by offering an alternative to the IRS villas. The RES projects are built on land measuring a minimum of 4000 m2. The selling prices are thus less excessive even though the quality of the RES constructions is often comparable to those of the IRS. Only the size of the overall project differs. There is no minimum or maximum price constraint for the sale of RES programs, so the residence permit is not automatically issued.
If the purchase is less than 500 000 USD the buyer will not obtain a permanent residence permit and will be able to live in Mauritius 6 months maximum per year. However, in the case of a purchase of RES property in excess of USD 500 000, the future owner will be issued a permanent residence permit on the same basis as an IRS property. In terms of taxes and registration fees it will be necessary to rely on an amount of 25 000 USD (or 5% of the value of the property) to be paid to the Mauritian government.
The IHS (Integrated Hotel Scheme)
The IHS plans open to foreign buyers. Unlike the IRS and RES, which are residences of villas or private apartments, the IHS is intended for hotel complexes. It is an investment scheme that offers the possibility to the foreign buyer to own a room, suite or villa in a hotel. The investor will not be able to live all the year in his room but a limited and defined number of free nights per year. The rest of the year the hotel manages for the owner the U well in rental lease. The IHS does not therefore permit the obtaining of a permanent residence permit. The Long Beach was the first hotel Mauritian has marketed rooms in IHS in 2012. Many solutions are available for your real estate investments in Mauritius.
The PDS (Property Development Scheme)
The Property Development Scheme (PDS), which has replaced the IRS and RES, allows the development of a mix of residences for sale to non-citizens, citizens and members of the Mauritian Diaspora.
The PDS provides the following:
- the development of luxurious residential units on freehold land of an extent of at least 0.4220 hectare (1 arpent).
- the development of at least six (6) residential properties of high standing;
- high quality public spaces that helps promote social interaction and a sense of community;
- high-class leisure, commercial amenities and facilities intended to enhance the residential units;
- day-to-day management services to residents including security, maintenance, gardening, solid waste disposal and household services; and
- social contribution in terms of social amenities, community development and other facilities for the benefit of the community.
A non-citizen is eligible for a residence permit upon the purchase of a villa under the PDS scheme when he has invested more than USD 500,000 or its equivalent in any freely convertible foreign currency.
The PDS is also a demarcation from the IRS and RES in as much as it does not differentiate between small and big landowners and harmonizes the registration duty to a single rate of 5% instead of USD 70,000 on registration of a deed under IRS and USD 25,000 under RES.