Solution to a vexing Velux situation

Your property queries answered


Q We need to replace the roof of a "lean-to" type extension with two Velux windows at the rear of the house. The flat-tiled roof has a pitch of only 9 degrees, which meant we have had leak (and blow-back) problems over its 15-year life. The roof size 30ft wide x 10ft deep. We now know the pitch is too low and that the Velux fitted windows were not suitable for the roof type. We would appreciate any advice on any replacement options available to us. We need two roof windows for light.

A A roof with a pitch of 9 degrees is too low for either natural slates, manmade fibre slates or interlocking concrete tiles. You cannot replace the roof with a pitched roof covering without creating a flat roof of marine-grade ply and bitumen felt under the pitched covering to prevent water ingress.

The minimum pitch for a Velux window is 15 degrees so you cannot have a pitched roof with roof lights. If the need to maintain roof lights is paramount, the only option available to you is to replace the pitched roof with a flat roof with either horizontal flat roof windows or, if you require the Velux windows to direct light into the room, then you can install the Velux windows on vertical upstands with the Velux window tilted to the required 15 degrees. Velux has technical details/sections about the required construction of these upstands, which you could give to any builder you employ. Velux is one of many suppliers of standard horizontal flat-roof lights. If you proceed with a flat roof, choose a reputable material supplier such as Moy Materials and ensure that its own technical representative attends site to sign off on the work so that the 20-year warranty can be issued.

Kevin Hollingsworth is a chartered building surveyor and a member of the Society of Chartered Surveyors of Ireland, scsi.ie

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Two dwellings

Q I am considering dividing our five-bedroom semi-detached house into two legally separate dwellings. I understand most of the legal requirements in terms of planning permission, building regulations etc, but my query is in relation to the taxation implications.

If I proceed and complete the physical work, what is the tax position in relation to each of the dwellings? If I continue to live in one, it would appear that this would be my principal private residence. However, in relation to the second, which would no longer be my residence, would the sale involve capital gains tax? Would the tax – or, more correctly, the gain – be calculated as a proportion of the price from the date of original purchase (1981) or from the date the new title was created? Are there any other associated tax implications?

A A liability to CGT arises when the proceeds (less incidental costs of sale) are greater than the original purchase price (plus purchase costs and adjusted for inflation if purchased pre-2003). CGT is charged at a rate of 33 per cent. An individual’s principal private residence is exempt from CGT if the individual has used the house as their principal private residence throughout the period of ownership.

For the dwelling that you will continue to reside in, principal private residence relief should be available against the entire gain, if any, that arises if you eventually dispose of the property. For the dwelling that you will no longer reside in, you will be entitled to principal private residence relief only for the period of actual occupation by you as a principal private residence, ie 1981 to the date the new legal title was created.

Any period following this will be deemed to be a non-occupation, although under tax law and practice, the final 12 months of ownership are deemed occupied for the purposes of the principal private residenceexemption.

In calculating whether a chargeable gain on a future disposal arises, it will be necessary to apportion the purchase price of the original property between the separate properties now created. This apportionment should be based on a method that is just and reasonable – for example, based on the respective size of the now separate buildings by reference to floor space. Further to this, the costs incurred in splitting the property into separate dwellings should be apportioned between each property in order to record the costs, which can be taken into account in calculating any gain or loss on a future disposal.

The portion of the gain exempt under principal private residence is calculated by taking the number of complete years the house was occupied as your home (including a deemed occupancy of the last 12 months before sale) over the total number of years of ownership.

Documentary records of all costs should be retained in support of such costs in the event your CGT return is selected for audit by Revenue.

Niamh Horgan is a tax adviser with Baker Tilly Ryan Glennon

House deal delay

Q We are interested in purchasing a property in Co Meath. We made an offer at the asking price and asked for a closing date in early 2016. We are not in any chain and our mortgage was approved just recently. The vendor wants to delay the date of payment and completion until August 2016 as they are waiting on their new build to be completed. They are suggesting water-tight contracts on both sides and a final move date that will be locked in, so no ongoing moving of the final date of completion out further.

What concerns would you have about this? I'm concerned about maintenance of the property and appliances as well as the fact the vendor is not inclined to take any less money even though we are accommodating them greatly.

A I usually have a “no longer than six-month closure” rule for most property transactions, the main reason being that there are too many eventualities that can occur that might render one or other party unable to complete the transaction, despite their intention to do so at the time the deal is made.

There can be changes in personal circumstances, significant weather events such as we have had this winter that have a direct impact on the property, or significant changes in the property market. Loan approval can also be an issue that I’ll address specifically.

You have identified maintenance of the property and appliances as being issues of concern; however, none of these would concern me greatly.

You can arrange to have a condition report carried out on the property now, with detailed photographs that take particular note of the interior decor and a detailed inventory of any appliances included, as well as agreement that they are tested at the pre-closure inspection. It’s highly likely that you would redecorate just after you move in, so minor deterioration in decor should not be too great an issue. Once contracts are exchanged, there is a responsibility on the vendor to maintain the insurance on the property and I presume you would need to be informed of anything that might affect future insurance cover on the property.

My concern is any items that are outside of your control. The vendors are moving to a new house currently under construction. My experience is that there can be overruns in completion dates of new properties. While it is the intention of the vendors to move directly to the new house when completed, do they have a contingency in place in the event it doesn’t complete on time? It is also my experience that there can be overruns on completion dates, despite contracts being exchanged; so if you do agree to the extended date, your solicitor will need to commence the completion process well in advance of the proposed closing date to ensure the deadline is hit.

If you are purchasing with a mortgage, the new Central Bank macro prudential rules state that there must be a valuation of the property within two months of cheque drawdown. This is fine in a rising market, but if there is a decline in values between the original valuation (now) and the closing date (August 2016), this may have an effect on your mortgage. This scenario cannot be ruled out as one recent house price survey reported a decline of just over 6 per cent in Dublin city and county property values for 2015. Borrowers on the 80 per cent LTV limit will be affected in such a scenario. You also need to ensure that there are no adverse changes in your financial or employment circumstances in the intervening period which would have obvious knock-on effects on the mortgage.

Alternatively, if there is a significant upward movement in prices, there may well be an attempt by the vendor to renegotiate price – while signed and exchanged contracts should well be a sufficient antidote against this, it’s amazing what a motivating factor money can be.

The main advantage, of course is that you should be insulated against any increase in the property market that might occur in the meantime; and that’s where the pricing issue becomes a matter between you and the vendor. At the end of the day, both of you are making the call between agreeing the terms now or leaving it to chance later. For many, though, the benefit of certainty of the deal is the main attraction in such a scenario.

Edward Carey is a member of the Society of Chartered Surveyors Ireland, scsi.ie