Home economics: Sinead Ryan answers your property questions
My friend and I are hoping to sell articles (inherited bric-a-brac and personal things we wish to dispose of). We've been offered a premises in the same building in which my daughter-in-law is based. She runs a travel agency there and she owns the property.
We have no idea of the steps needed for this enterprise. We have a guideline as to insurance, public liability (for a period of 12 months), but we are not sure how we stand with regard to rates or other costs, including tax.
I am a pensioner, my friend is a good bit younger. We would not be doing this long-term, maybe 12 months. Can you please help us, or give us contacts that will be of use to us?
A. Starting a small business is not an enterprise to be undertaken lightly. You don't say what your business experience is (if any), but there's certainly much to consider.
I have to be honest and suggest that if disposal of the items is your raison d'etre, you could simply consider using an auction house for furniture items, and donating smaller ones to local charity shops. Commissions are minor (around 6pc) for auctions and an auctioneer will also guide you in terms of price.
Alternatively, using a website like donedeal.ie or ebay.ie avoids all of the costs and stress of running a shop and you will still make money.
If you wish to make a temporary or 'pop-up' business out of it, and you have the premises lined up, I can offer some useful places to go for information below.
You'll need to take into account whether there's a viable business in this at all, because of the many places online that people can get second-hand items for free or low cost.
Good market research and maybe a poll in your town will determine this.
Secondly, look at all of the costs you're likely to encounter, including public liability insurance, property insurance, local authority rates, rent, legal, taxation, salaries, utilities etc, and be ruthless. If you can't make a profit, you won't get off the ground.
Start with Citizens Information (citizensinformation.ie) which has a good guide to starting a business. The Small Firms Association (sfa.ie) and ISME (isme.ie) have similar and your local enterprise office (LEO) can offer courses, micro-finance and other guides to business at localenterprise.ie.
Please don't spend any money until you are certain this is going to work for you, and best of luck.
Q. If I sell a house which has a lien at a gain, will I be liable for Capital Gains Tax? The mortgage company is insisting that I must pay the profit I'm making to reduce the mortgage on a second property on which the lien refers to?
A. Capital Gains Tax (CGT) is the tax payable on the gain in value of an asset, in your case, a house which is not your principal private residence.
If the property you are selling is the house you live in as your principal residence, then no capital gains tax at all is due.
A bank or mortgage company shouldn't care about the CGT bill, nor is it affected by whether or not there is a lien (which is simply another name for a mortgage) on the property.
If you sell an asset, the tax, currently 33pc, is due on the entire profit, less an inflation mark-up, which Revenue will allow for each year since the purchase.
The bill is between you and Revenue, not your lender.
However, it may mean that your bank is saying you need to sell one property before you can use the proceeds to pay down another.
In this case, it is most likely conscious that CGT will be due and are taking the view, not unreasonably, that the gross proceeds are not all yours; the bank seems to be referring to the net value once the CGT is paid.
The Ryan review
There's often a call for banks to get back to basics.
At the recent Kilkenomics festival I heard many economists pinpoint the start of the downfall of banks to the moment they ceased to become utilities whose job it was to store money and bring depositors and borrowers together - and instead became effective hedge funds run by traders with a sole eye on gearing.
So I am heartened by those banks now beginning to lean toward the ordinary business of banking when customers need it, rather than when it suits the bank. This has all been made easier by the onslaught of online options.
KBC is a leader here (although AIB has excellent budgeting, e-wallet and app services it seems curiously shy about trumpeting), and its latest Q3 results make for fascinating reading.
A total of 19,393 new current accounts were opened with the bank (52,000 year to date).
The Belgian minnow is also almost unique in offering free accounts and mobile young things like its funky app and Fitbit pay, so that may be a reason. But it doesn't account for the astonishing 1,000pc increase in 'web chat' with one in 10 customer enquiries occurring outside 'office' hours.
With that demand, it's launching a 24/7 service.
This is core business stuff.
Yes, there'll be opportunities to flog them loans, but Business #101 is no bad thing.