Our experts answer your queries
Will I have to pay CGT on full value of gain if I rent out my house?
Q I OWN my own house in Dublin but am considering letting it to move to a job in Galway. If I sell it in the future, will I be liable to pay Capital Gains Tax (CGT) on the full value of the difference between the purchase and sale price? I bought it 20 years ago.
ANo, in these circumstances you are not liable to pay Capital Gains Tax on the full value of the difference. I assume that you have been living there continuously and that it has been your principal private residence (PPR). If you sell your house now there would be a full exemption from CGT on the gain – this is called the PPR relief.
In relation to the period of rental income, CGT will apply. As you have occupied your house as your main residence, the final 12 months of ownership are also treated as if you lived in the house yourself for CGT purposes.
It is best to illustrate how this works in practice with an example. I assume that you lived in this house for 20 years when it was your principal private residence.
You now rent it out for a further two years, then sell it and make a capital gain of €180,000. (In calculating the gain I have already deducted costs you might have had in relation to the sale of the house and have adjusted this for inflation.)
Capital gain for a sale after two years rental period:€180,000
PPR relief:period of ownership:
264 months = 22 years (20 years living there; two years rental period)
Period of time of own occupation:
252 months = 20 years + 12 month ( including the last 12 months of ownership)
€180,000 x 252 divided by 264 = €171,818.18
PPR relief:applies to €171,818.18 of the gross gain
Capital gain to be taxed: €180,000 minus €171,818.18 = €8,181.82
As the first €1,270 of your net gains in a year are not chargeable to CGT, the chargeable gain is €6,911.82 which is taxed at 25 per cent leaving €1,727.95 due in capital gains tax.
- Ursula Tipp is a partner and head of tax at law firm ByrneWallace, byrnewallace.com
Developer of our building hasn't handed over the common areas
Q I AM a director of the committee that runs our apartment block. The developer should have handed over all the common areas on Oct 1st under the Multi-Unit Development Act (MUD) - but we cant track him down. What can we do?
AFirst of all, there are no directors of committees so it is important to clarify whether you are a member of a committee (which is only an ad hoc informal arrangement) or are a director of the management company, as the options to resolve the issues are different. If the developer did not transfer the common areas of existing multi-unit developments by September 30th, as he should have, a unit owner or the Owners Management Company (OMC), can apply for a court order directing the developer to transfer the common areas.
If the OMC is still in the control of the developer there are provisions within the Companies Acts where 10 per cent of the membership can call an extraordinary general meeting and seek to take control. Searches in the Company Registration Office (CRO) would identify the directors of the management company who may still be the developers and provide details of the developers too including their registered office.
The MUD Act does not have any particular features available to apartment owners who may now find themselves suffering from the consequences of their developers being without funds or having gone out of business.
These circumstances are clearly difficult and to ensure you act in the best interest of your development and all its owners, professional/ legal advice would be strongly recommended. It is important to be aware that any application to the courts will have associated risks and such costs may not be recoverable.
Siobhan O’Dwyer is a chartered surveyor and chair of the property management professional group of the Society of Chartered Surveyors Ireland, scsi.ie
What should I do about fire safety?
Q I OWN AN apartment and after the news about problems at Priory Hall, I’m concerned as to whether the fire safety equipment is in order and has been inspected. What should I do?
AThere are two aspects to this: fire safety within your apartment, and the fire safety of the common areas of the development. In relation to your own apartment, the biggest issue is whether you have a suitable, functioning fire alarm system, and whether the apartment is adequately fire separated from the rest of the development.
Sometimes, particularly in older apartments, there can be ducts or services running vertically in a block, which in the event of a fire would allow smoke to travel through the development. Fire separation in roof spaces (where the development has a pitched roof) can also be inadequate, potentially allowing smoke to travel to other units.
In relation to the common areas, there are a number of aspects of fire safety that may need review. These include the fire alarm system for the development, emergency lighting (which operates in the event of a power failure/fire activation), illuminated fire exit signage, whether there are adequate fire doors, whether means of escape (staircases and corridors) are adequately separated from apartments and lifts, and whether any breaches of compartment walls and floors have taken place. In both cases, I would recommend an inspection by a suitably qualified professional (chartered building surveyor or other suitably qualified fire safety consultant/engineer). The inspection within your apartment will probably need to be commissioned and paid for by yourself. The inspection and report on the common areas should be commissioned by the Owners Management Company for the development on behalf of all of the owners.
Sometimes, the Management Company will extend the remit of a survey to include individual apartments.
Krystyna Rawicz is a chartered building surveyor and member of the Society of Chartered Surveyors Ireland, scsi.ie
I've lost my deeds
Q THE DEEDS of my house are missing. Can I still sell it?
AYES IN most cases you can sell your house without the deeds but only after you have taken the following steps: first you should establish how the deeds became lost and set out the circumstances in a statutory declaration. If your solicitor is the party who last had custody of your deeds he or she should also make a statutory declaration.
In each case, the declaration should confirm that the deeds have not been placed with a lending institution or other third party by way of mortgage or other security. It should also say that despite intensive efforts to retrieve them the deeds have not been found and that they are irretrievably lost. Some purchasers may insist on an insurance bond to protect them in the event that the deeds should emerge at a later date in the wrong hands, as it were. The bond should at least be for the amount of the sale price.
The second step is to attempt to recreate all or part of your title. This will be easier to do where house is registered with the Property Registration Authority. If not, you can still get a copy of a memorial of the deeds from the Property Registration Authority, which is often accepted as secondary evidence of title.
If you live in a large estate, your neighbours’ title documents will be similar to your own. You may be able to obtain copies of your title deeds which may have been kept on file by your solicitor or even on the file of the vendor’s solicitor or even the developer’s solicitor if you live in a multi-unit development.
Copies of planning documents and other documents of public record can be obtained from the local authority or appropriate public office. Often, you can have architects’ certificates recreated by the firm of architects. Obviously there is a cost involved in taking these steps but they should not be prohibitive.
Orlaith McCarthy is a consultant in the private client department of law firm ByrneWallace, byrnewallace.com
