Home Economics: answering your property questions
Personal Finance expert Sinead Ryan answers your property questions.
Q. My wife died last year and I am quite frail and am concerned I'll need nursing-home care in the future. I am worried about all my assets being used up for this purpose under Fair Deal and wonder if I should start putting a bit of land I own, along with some minor business assets, in a trust for say, my grandchildren, to avoid them being used to pay for the care. If I did need a nursing-home long-term, my family couldn't afford to pay for it. My own house is going to my daughter and son, but the other assets I had intended to will to the grandchildren and want to do so intact.
Answer: Your proposal to reduce the level of assets which you own in an effort to preserve them for children, grandchildren or intended beneficiaries in your will has two main problems according to Helen Ferguson of Mullany Walsh Maxwells Solicitors.
"Firstly, for the purposes of the financial assessment, any assets which you transfer for less than their true value in the five years prior to making your application under the Fair Deal Scheme will be taken into account in your financial assessment under a 'look back' arrangement.
"Secondly, the transfer of your assets during your lifetime, whether into a trust or directly to named persons, could have significant taxation implications, principally capital gains tax, capital acquisitions tax and stamp duty. In the event of a transfer to a trust, there could be further taxation implications, depending on the type of trust you establish.
"Should you provide false or misleading information about your income or assets in your application, which would include not revealing assets transferred at an under-value, you would be guilty of an offence. The scheme does contain special rules for the treatment of family business assets, whereby the annual 7.5pc contribution relating to them can be capped after three years in the same way as it can for your principal residence and this is something that you may want to investigate further in consultation with your legal or financial advisor."
Q. I own a two-bedroom apartment in which my sister is the sole tenant. I live in Britain and expect to stay here for another year at least. I would like to let the other room out. Can I claim tax relief under the Rent a Room scheme even though I'm not there, i.e. can it be claimed by me as my sister is de facto also the landlord of the property in my absence?
Answer: The short answer is no, I'm afraid. To avail of the Rent-a-Room relief scheme, Revenue rules state you must occupy the property as your sole residence during the year of assessment. This means that it is your home for the greater part of the year and is where people would normally expect to make contact with you. This is clearly not the case with you.
However, there may be another option. Revenue allows a tenant sub-letting to claim the relief (with the owner's permission), so in theory, your sister could claim it, which, in 2017, is allowed at a maximum of €14,000 per annum. She would be a licensee, rather than landlord and so does not need to provide a rent book, register with the Residential Tenancies Board etc.
It's not quite what you had hoped, but will allow perhaps an offset to let you charge her more rent as a result and maximise your own income from the property.
The Ryan Review
Institutional landlords are often decried for being impersonal and difficult to deal with — not hesitating to evict tenants or hike rents.
In fact, often they are far better than the ‘amateur’ variety that popped up in huge numbers during the Boom. The guy who bought the house next door as his pension needs to (a) pay the mortgage, (b) cover the huge number of extras from registration costs to broken washing machines to letting fees and (c) try to turn a buck for himself. In plenty of cases, the pension won’t get a look in.
They also have a lender looking over their shoulder. With 18pc of buy-to-lets in arrears, it turns out property wasn’t the easy gig many took it to be when lending was flush.
A company that is prepared to take the long steady view, and can afford to do so, often offers better stability to tenants (and backers). They’re happy to notch up their 3pc–5pc per annum and individual tenant movements don’t affect them.
With 1,500 apartments due to be sold off by Marlet (formerly New Generation Homes) to an institutional investor — most likely a pension fund — this should prove a win-win for both.
Given many of the units aren’t even built yet, it will be interesting to see the uptake. If bought by one fund, it will make it the second largest institutional landlord in the country, behind Ires Reit.
It’s always distasteful when repossessed homes are flogged to a vulture fund, but this is the positive side of the professional rental market at play.