Home economics: Our property finance expert answers your questions

Sinead Ryan Twitter

November 06 2020 02:30 AM

Q I moved back in with my parents in 2017 after my marriage separation as it suited us all. They are frail and I needed to leave my house for personal reasons as my ex-husband still resided there. Our divorce is now finalised (it was delayed due to Covid-19), my father died in the meantime and my mother will probably be moving into a nursing home in the new year. I have no wish to move back to my marital home and we have agreed to sell it as part of our divorce agreement, and I will use my half to do up my parents’ house and live here permanently. My solicitor says I may have a tax issue — what is the consequence?

A Marian Ryan, Consumer Tax Manager, Taxback.com, says your solicitor may be referring to Capital Gains Tax (CGT), which is payable on any profit you make on the disposal of an asset. There is normally a derogation given if that ‘asset’ is your principal private residence (PPR), which is generally exempt from CGT.

However, she notes that the marital home would not be considered your primary residence from 2018-2020 since you were residing with your parents. You can only claim the CGT exemption for the time you lived in the property, which, in your case, would be a partial PPR relief.

“If you dispose of an asset that you jointly own, you only pay CGT on your share of the gain. Assuming you and your ex-husband both owned the marital home 50/50, the CGT gain would be split 50/50 between you both. Your chargeable gain would be worked out by taking the sales price and deducting all allowable expenses such as purchase price, solicitors and auctioneers fees, costs of purchase and costs of sales.

"The last 12 months of ownership of a PPR is also considered to be included in your period of occupation. Say, for example, you and your ex-husband owned the house for 14 years. You can claim exemption for the 10 years it was your PPR plus an additional 12 months of ownership. You can claim PPR relief for 11 of the 14 years you both owned the house. (11/14ths or 0.79 of the time). This deduction is taken from your chargeable gain along with your personal exemption and used to work out your taxable gain. You will then pay CGT at a rate of 33pc on your taxable gain.”

Q Our house, which we’re putting up for sale, suffers from mould in the bathrooms due to poor ventilation (there’s no window in one of them at all). It’s been a big problem for us and I have been painting it with a anti-mould biocide paint every year so it looks fine. I have tried dehumidifiers and a fan extractor, but without success. Is it a requirement to disclose this or will their surveyor pick it up? My wife is anxious we reveal the issue; I am not.

A Your wife is clearly anxious to do the right thing. However, from a legal standpoint, there is no requirement on the vendor to disclose the ventilation issue, according to Susan Cosgrove of Cosgrove Gaynard Solicitors.

"A vendor is obliged to disclose rights or restrictions that affect a property, but the old Latin phrase ‘caveat emptor’ applies to property sales in Ireland, which is roughly translated in English to ‘let the buyer beware’. Under the general terms and conditions in a contract for sale, a purchaser shall be deemed to purchase with full notice of the actual state and condition of the property. This would be the reason why it would always be recommended that a buyer carry out a full survey prior to purchase.”