Property Clinic

Your queries answered

Given that we paid for refurbishments as a gift to our daughter, can she claim this tax relief?

Given that we paid for refurbishments as a gift to our daughter, can she claim this tax relief?

 

Q I would appreciate any help with the following. The county council and An Bord Pleanála granted planning permission for a takeaway next door to our home recently with the stipulation that it closes at 11pm. I wish to know who will police this closing time. Will it be the county council and, if so, what department?

A Under the Planning Acts, the Minister for the Environment is responsible for planning policy. Part of this role is the effective enforcement of the planning system which is done through the relevant planning authorities. Part of their remit is to:
Bring unauthorised development under control;

Remedy any undesirable effects of unauthorised development including the removal or cessation of unacceptable development; and

To take appropriate legal action where necessary.

The enforcement section of the planning authority (county council) is responsible for operating Ireland’s planning enforcement regime.

From your query, it can be assumed you are concerned the takeaway will not abide by the conditions set in the permission. If there is an issue in the future, the matter could be resolved by discussing the issue with the operator.

If this does not suffice, then you can make a written complaint to your planning authority outlining the nature of the non-compliance with the relevant planning permission condition. The submission should detail:

The nature and extent of the non-compliance

The location of the development;

A timeline (ie how long the non-compliance has been ongoing);

The effects (on you and the surrounding area).

Under the Planning Acts, it is obligatory for the planning authority to follow up substantive written complaints in relation to breaches, unless it considers the complaint to be trivial or vexatious. On receipt of a written complaint, the authority must issue a warning letter to the relevant person within six weeks of the written complaint. The person has four weeks to respond in writing. The matter is then investigated by the local authority and a decision to pursue enforcement can be made if the situation has not been resolved.

Further information can be found in A Guide to Planning Enforcement in Ireland available on environ.ie.


Claire Solon is a chartered surveyor and member of the Planning & Development Professional Group of the Society of Chartered Surveyors Ireland, scsi.ie

Q Our daughter bought a second-hand apartment in Dublin in 2006. Myself and my husband paid for the refurbishment and fitting out of the apartment in 2007. Our daughter lived there until January 2010 when she emigrated and rented out the apartment. In working out the tax due on the rental income we would like to know the following. Can 12.5 per cent of the fitting and furbishing costs be set against the rental income annually and if so for how many years from 2010. Given that we paid for the refurbishments as a gift to our daughter, can she claim this tax relief?

A Your daughter can indeed claim ‘capital allowances’ – tax depreciation – on fixtures and fittings (F&F) as if she incurred the costs herself. The rate of capital allowances is 12.5 per cent per annum and usually lasts eight years. It applies to the value of the F&F when the property became a rental property in 2010 (ie you apply a second-hand value at 2010, as opposed to their cost new in 2007.) This deduction only applies to F&F and plant and machinery – enhancement expenditure to the apartment would not qualify, although it may go against the capital cost of the apartment for Capital Gains Tax (CGT) purposes. Repairs in 2007 cannot be used to reduce the amount of taxable rental income in 2010.

A couple of other tax issues are worth highlighting. Firstly, I assume that when you and your husband paid for the refurbishment work, this was a pure gift and did not give you any entitlement over your daughter’s property. I recommend you check that, when combined with previous gifts, your daughter has not exceeded the parent to child gift/inheritance tax threshold. This threshold was €496,824 in 2007. (it has reduced over the years, to €225,000 as of January 1st 2013 – this may impact on later gifts). Second – and this is really a point for your daughter’s tenants – there is a requirement to withhold some tax on rent paid to non-resident landlords and pay this tax over to Revenue. Third, your daughter has income tax return and payment obligations – the deadline for 2012 income tax returns is October 31st , or November 14th if filed online. Fourth – if your daughter enjoyed a favourable stamp duty rate in 2006, she should check that by renting out the property in 2010 she didn’t breach the conditions of the relief. Finally, if your daughter sells the apartment she may have CGT to pay; however, depending on the timing of the sale, she may be able to gain considerable principal private residence relief – I recommend that your daughter seeks out specific advice in this regard, as a little careful planning could yield significant rewards.


Dónal Leahy is a tax director at Baker Tilly Ryan Glennon, bakertillyrg.ie

QWe emigrated from Ireland to Australia three months ago and let our property to a couple. However, we have not received any rent since the first month’s rent which was paid in advance. I have tried phoning and emailing the tenants but to no avail. Can you please advise us on what the next (legal) steps are?

A You need to establish through a friend, relative or neighbour if your residence is still occupied. If you establish that it is occupied and the tenants are simply not returning your calls or have no intention of paying the rent, then you need to act quickly.

I assume you do not have a professional agent managing your property and may not have taken the necessary steps which can help avoid this kind of situation by securing all the relevant references, background checks and tenancy agreements. You should have registered the tenancy with the Private Residential Tenancies Board (PRTB) which is the statutory agency and is there for both the protection of the landlord and tenant. If you have not registered with the PRTB you must do so immediately. There will be a late entry fee of €180. You will need a minimum of the tenants’ details, ie name, previous address, PPS number. This can all be done online by going into the PRTB website www.prtb.ie .

Firstly you must to write to the tenants notifying them of the arrears and give them 14 days to respond. If they do not respond, you must then give them 28 days’ notice of the termination of the tenancy.

You then immediately send in an application for dispute resolution in relation to the payment of the rent arrears. You can do this online via the PRTB website. You may choose between adjudication and mediation. According to the PRTB at present, 95 per cent of cases are dealt with through adjudication.

If you go the adjudication route, following the hearing an adjudicator’s report will be sent to the PRTB and issued to both parties. One or more of the parties may appeal to a tribunal against the adjudicator’s determination within 21 days of the report being served on them. If this happens there will be a tribunal and the board will make a determination order. If this is not complied with, the board may seek enforcement through the courts. Ultimately this may result in you having to go to court to get the sheriff to evict the tenants if they do not comply and could take between six and nine months from the start of the process.

Unfortunately, you are in a difficult scenario but you must follow the steps as required by the PRTB. My advice would be to consider appointing a professional agent to let and manage the property once this situation is resolved.


Kersten Mehl is a chartered surveyor and member of the Property Management Professional Group of the Society of Chartered Surveyors Ireland, scsi.ie

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