Home Economics: Answering your property questions
Q: My parents have left their assets to myself and my brother in their will. My brother took over the family business and is being left it entirely, which makes sense. I am getting the family home, which is worth about €450,000. It turns out he'll hardly be paying any tax on his bequest due to different reliefs, etc, but I will be on mine - this seems unfair. Is there anything I can do?
I don't think there is, unfortunately. When bequests are received as inheritance, there are specific reliefs for farm and business assets to avoid them having to be sold off outside the family. The same doesn't apply to residences.
Christine Keily of Taxback.com explains: "Based on the information provided, it is likely that your brother would be looking to avail of 'business relief' which reduces the taxable amount of the gift/inheritance to just 10pc if certain conditions are met, including:
- the relevant business property or interest is received by the beneficiary as a gift or inheritance;
- the person providing it possessed it for a certain period (two years in case of inheritance);
- the beneficiary cannot dispose of that property for a period of six years or any capital acquisitions tax (CAT) saved at the time of the gift/inheritance must be repaid to the Revenue."
It would appear, therefore, that once all the relevant conditions are met, your brother will be able to reduce the taxable value of his inheritance significantly more than you can. Unfortunately, there is really nothing that can be done to avoid this once the inheritance has taken place. For you, the current tax-free threshold is €280,000 assuming no other gifts or inheritances have been received. This may be increased in the budget but, today, it would result in a tax of €56,100.
Q: I am starting a new business which, at least initially, will be run from my home. I'm converting the garage and turning one of my bedrooms into an office. I also need to have a separate entrance for suppliers and put up a small sign. I've secured a bank loan and support from the Local Enterprise Office together with redundancy money. However, are there other issues I need to consider?
There are lots! I asked Brian McNelis of the Irish Brokers Association for advice and he says you should advise your existing home insurer that a business is going to be run from the home. Structural changes can be a rating factor.
Although you may be covered, some insurers restrict 'business' occupation to a home office or surgery, so a separate business policy may be required. The specialist in this area is Kidd Insurances, which has a 'Homeworkers' plan which may suit you.
An insurer will want information on the type of business (manufacturing, retail etc), turnover, whether you have employees, public access and if product liability cover is required (e.g. if it were to cause damage).
Whether you import/export will have insurance and tax implications. If you are supplying advice to customers, you may need 'professional indemnity' cover, or 'cyber' cover if you are storing customer data. Otherwise, your considerations should take account of the cost and time to reconfigure the property, which also needs to be insured during the works. Builders' liability will not cover homeowners liability. Before you start, however, check whether planning permission is required.
I'd also draw your attention to Capital Gains Tax which, if you ever sell the house, may become liable. As you are changing the use of your property, Revenue will deem the commercial parts to be separate from your Principal Private Residence. Generally, no CGT arises when you sell your home, but is chargeable on commercial entities. What they usually do is separate out the non-residential parts and apply the tax, which is currently 33pc.
Sinead Ryan: The Ryan Review
With more flags raised than on St Patrick's Day, the Fine Gael think-in finally came to an end in sieve-like fashion.
Ministers were falling over themselves to promise first-time buyers help in the forthcoming Budget without being remotely specific about what it might be.
Simon Coveney suggested a sort of a grant... maybe. Or a tax rebate thingy, or equity swaps, or something. With no irony at all, he added: "Any measures we take need to be clear, easily understood and easy to implement."
Maybe they'll stun us with a helicopter drop and hand out cash like lotto tickets at the Department of Finance.
Or maybe they'll stop messing about in the property market once and for all. (That last line was a joke). The result may well be that the market completely clogs up (which, in fairness, wouldn't be a big leap from where it is now), until everyone waits with bated breath for Mr Noonan to spill the beans on October 11.
Intent on screwing up the independence of the Central Bank, whose draconian measures on deposits and income-limited lending were designed specifically to put a halt to ministerial gallops, Fine Gael is now in danger of doing exactly what Fianna Fail did and overheat a market which doesn't need it.
The CBI will be eye-rolling now at the politicking going on and, if it has any sense, will ignore the lot of them.