Home economics: Our property finance expert answers your questions

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Home economics: Our property finance expert answers your questions

 


One reader wants to sell their house in Dublin when they retire
One reader wants to sell their house in Dublin when they retire

Q I moved out of my home in Dublin in 2006 to let it out and built a new house down the country when building costs were at their highest. I would like to sell the house in Dublin in one-two years’ time as I am retiring. Will Revenue accept the valuation of the property at the time of letting i.e., can that valuation be deducted from the selling price in order to calculate any capital gains tax liability?

A Capital Gains Tax is calculated on the difference between the selling price and the cost of the house at the time it was acquired, or its market value if the house was acquired as a gift or inheritance.

The first €1,270 of a gain (after deducting losses) is exempt from CGT, however it’s unclear whether you might qualify for Indexation Relief, which ceased on properties owned after 2003 and which allowed an annual inflator against the gain.

Revenue says your CGT liability can also be reduced by deducting the following:

⬤ The cost of purchasing the asset;

⬤ Any money spent by you which adds value to the asset (known as ‘enhancement expenditure’);

⬤ Costs (for example, fees paid by you to a solicitor or auctioneer) when you acquired and disposed of the asset.

Revenue added: “When an individual disposes of a property, that individual will be exempt from CGT if that property was his main residence. In the scenario outlined, the period of ownership and occupation of the house by the individual have not been provided. However, as he has stated that he lived in the property up to 2006, he may be entitled to Principal Private Residence (PPR) Relief. PPR relief can be claimed for the period of time the owner lived in the house.

“As the reader has occupied the house as his main residence, the final 12 months of ownership will also be treated as a period of occupancy. PPR Relief is calculated on a pro rata basis. An example of this, including calculations, can be found on page 34 of the ‘Guide to Capital Gains Tax’ from Revenue.ie.”

The tax itself is 33pc and for disposals made between 1 January and 30 November, you must pay CGT by 15 December of the same year.

Q My elderly mother is a divil for not putting on the heating, preferring to huddle against her one-bar electric heater. Money is not an issue as I’m paying her bills but she’s reluctant to ‘waste’ the oil. A work colleague told me about an app that lets him control his gas heating remotely, but I don’t know if it would work for me – what do you recommend?

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A There are lots of gadgets on the market which control heating and water by way of an app, and it’s true that lots of elderly people can be frugal about using heating sufficiently, even when they’re not paying. Also, older people may not feel the cold as soon as we might, and therefore delay switching on heating, which could be dangerous.

I’m not going to recommend any one product, but you should first try the energy provider which supplies the electricity to the house. The Hive (Bord Gáis), Climote or Nest (Electric Ireland) or Netatmo (Energia) all do a similar job, but you are not obliged to stay or switch to those companies.

It works by fitting a small box (a little larger than a pack of cards) in the house which is linked to the boiler system (most oil-fired central heating systems work fine, but just check this out in advance). The app can either be set up on a schedule to come on/off, or you can boost this by simply switching it on remotely. Most of them control the hot water cylinder too, so it’s really handy.

You can expect to pay around €250 for the unit (although there are some offers for free ones if you try the likes of OneBigSwitch.ie, Bonkers.ie or Switcher.ie) first. There may also be an annual running cost but it’s not much.

You’ll find the ease of it fantastic, and your mum will be more comfortable. However, you will have to explain what’s being fitted in her house and why!

 

The Ryan Review

The average ‘sold price’ for houses across Dublin this year is almost identical to last year, indicating that growth in the housing market has slowed down, according to research by search engine Perfect Property.

Its analysis of the Property Price Register (actual rather than listed prices) shows the average sold price of a house in Dublin for Q1 2018 was €417,037, while in Q1 2019 it was €418,429, an increase of just 0.33pc. The average current listing for the start of Q2 2019 is even lower at €372,000.

Even in postcode hot spots like Ranelagh, the drop is 2.3pc over 12 months while Donnybrook and Stoneybatter saw negative 12.45pc and 11.38pc figures respectively.

That won’t please the denizens of some leafy suburbs but ironically, may lead to an increase in supply. Prospective sellers, unsurprisingly, hold out where they can, to get the highest price. Once they believe it’s been reached, they may be more inclined to sell.

There is still some catch-up outside the cities, and even within the capital, fashionable city centre locations like Smithfield and Portobello are still seeing price rises. But it looks like it won’t last.

Indo Property