Wednesday 21 March 2018

Home Economics: Sinead Ryan answers your property questions

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Q: We recently lost out on a house we badly wanted when we found out at the last minute that there was a legal dispute as to its ownership after the alleged owner’s will was read. It was also being sold via a receiver through a complicated estate.

It was a complete mess and even though we knew some of this before going ahead, we were led to believe there were no real problems. This was after months of waiting and although we got our deposit back, it’s depressing to be back on the rounds again; what questions can we ask to avoid anything like this happening again?

A: Forewarned is indeed forearmed, although yours sounds like a very unusual set of circumstances. Legal issues like title can often delay a closing, as can receiver-led sales, so it sounds like you encountered a double whammy.

The good news is that you are already experienced ‘viewers’, so you should know what you want and don’t want in a property. This is a great start and will prevent you getting side-tracked. When you consider the next house, the estate agent should be able to answer the following:

  • What’s included in the sale (eg carpets, window  treatments) and, more importantly, what’s not. This will avoid squabbling at the transfer time over things like bathroom cabinets or garden sheds.
  • How much interest has there been in the property and are there any current offers. If you’re in a position to do a cash deal, be upfront. If not, show you have immediate mortgage approval.
  • Ask how long the house has been on the market, and be open about what minimum price the vendor might accept. Nobody can afford to be coy about something so important.  It tells the estate agent you’re serious about the purchase.
  • Ask why the house is on the market and read the answer between the lines. If it’s because the owner is trading up or down, fine; if it’s because the neighbours are hell, or there’s a motorway being built behind the garden, this is how you find out. Also ask whether the people on either side are renters, owners or have children (if this is important to you).
  • What are the service or management fees? Is there an active residents’ association?
  • Finally, ask about the title. The agent should be certain this is known before s/he gets involved in the sale. Check how long you would have to wait to move in if your offer was accepted immediately; this will tell you if the vendor is waiting on another property or a loan to come through.

Q: My father died recently without a will so we are transferring everything to my mother. If she wanted to divide the assets among  her adult children now; rather than divide them in her will, can she do this? If so will we have to pay gift tax or can we accumulate the value of the assets under current inheritance rules, ie pay tax only on an amount above €310,000?

A: The short answer to your question is yes, she can, but it doesn’t matter.

Whether you give gifts during your life, or bequeath after death, gift tax and inheritance tax (Capital Acquisitions Tax, or CAT) amount to the same thing.

Children are entitled, as you say, to receive €310,000 each as ‘Class A’ donees tax free, but this is a lifetime cumulative figure for all gifts and inheritances, so let’s say she gives each child €100,000 now, that leaves them in a position to receive another €210,000 after death before CAT is due. If she gifts them €310,000 each immediately, there is no further tax free allowance available. If she gifts over the threshold during her life, any tax due is payable on October 1 in that year if the gift is made between January and August, otherwise it’s the following October.

The best advice is that your mother makes a will immediately, regardless of her decision and double check with a solicitor that your plan to ‘give’ everything to your mother from your father’s estate is sound in law. It may be necessary to apply for Probate.

The Ryan Review

WHEN I was a child I had a stack of Russian dolls; you know, the ones that fit into each other until they’re all hidden inside the biggest one.

The matryoshka dolls provided hours of fascination. The financial version of this game isn’t as much fun and provokes question rather than curiosity.

Each quarter the Central Bank produces its figures for mortgages in arrears. While these continue to fall (just the 73,706 to clear!), representing 10pc of all mortgage accounts, the baskets these are placed into continue to multiply, much like the dolls.

So, at the beginning of the crisis, we had the 90-day basket, then 180-day one, right up to the maximum reported one, which is 720 days.

That’s two years arrears or thereabouts, but there are a significant number for whom new baskets should be made. According to economist Seamus Coffey there’s a case for a 1,440 day basket (almost four years), as banks and courts maintain their repossession reluctance.

Only 340 properties were taken back in the last quarter (less than a third of these by court order). By lumping the real basket cases into one giant basket doesn’t hide the figures; it just creates a bigger receptacle.

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