Home economics: Sinead Ryan answers your property questions
Q: I purchased a house in 1974 which has been rented continuously. During that period I have carried out numerous renovations on the house from wiring to heating, putting in new windows and replacing the bathroom and kitchen. I am now selling it but do not have receipts for the work, which was carried out years ago. Does Revenue allow concessions for work like this carried out over 40 years against my Capital Gains Tax bill as I couldn't offset it against rental income?
A: When calculating your Capital Gains Tax liability, the following items are allowable in calculating CGT, according to Revenue:
- the cost of purchasing the asset;
- any money spent which adds value to the asset. This is known as 'enhancement expenditure' (It does not include routine maintenance such as painting);
- costs of purchase and sale (for example, fees paid to a solicitor or auctioneer) on the acquisition and disposal of the asset.
Section 552 of Taxes Consolidation Act (TCA), 1997 outlines the expenditure which is allowable for CGT purposes. Costs such as replacing the windows, bathroom and kitchen do qualify as allowable enhancement expenditure, whereas rewiring would constitute routine maintenance and would not ordinarily be allowable.
However, the absence of evidence relating to the qualifying expenditure would prevent such expenditure being allowed as a deduction in calculating the amount CGT due on a disposal of a rental property.
It is a pity you don't have receipts and other documentation even from a long time ago, because where a taxpayer can produce evidence of qualifying expenditure, there is no time limit from the time that the expenditure was incurred in which it can be claimed. Revenue's website includes an example of a CGT calculation where the construction of an extension was allowed from 31 years prior to the sale. I'd have another root around if I were you, but it is highly unlikely that they'll allow offsets based on a survey of it now.
Q: My neighbours came home from a three month trip away to find their living room ceiling had leaked badly, and ruined their walls and floor. While they are dealing with this, I note it is very close to our partition wall in a corner of one of our rooms, although my living room shows no damage. They want to get someone in to look at both properties to avoid it happening again, and want me to pay half. Should I or do I need to agree? I don't want to fall out but my house is fine.
A: None of us want to fall out with our neighbours, but sometimes you do have to take a stand.
It seems to be entirely out of concern that they have suggested you check your own property in case there's a leak, despite there being no evidence for it, but this is entirely your own decision and not something they can force upon you.
In any event, this is most likely a case where insurance assessors are involved, and they will probably want to do that their own way.
Susan Cosgrove of Cosgrove Gaynard Solicitors adds: "You mention you are in a house and so there should be no shared services between your properties in terms of pipework between your properties internally. It seems your neighbour wants to check if there is a leak from your property causing damage to theirs. As you mention there is no leak in your property and so it would appear to be an issue for them only.
"Given the leak is very close to your property, you probably should ensure there has been no damage internally to your property from their leak that might not be visible as of yet.
"If you were living in an apartment, there could be pipework running between yourself and a neighbour which would warrant an inspection but in this case I do not see the connection."
I'd tell them politely that you don't feel the need to pay for anything at this stage, but thank them for being interested.
The Ryan Review
Economists are never happy. I'm not sure if they're born that way, but they don't call it the 'dismal science' for nothing.
When things seem to be going well, their instinct is to slam on the brakes. Likewise, when all seems lost, they're talking down the bad news. None of them ever seem able to agree with each other, either. As George Bernard Shaw observed: "If all the economists were laid end to end, they'd never reach a conclusion."
So what are we to make of the latest CSO house price indicators, which show prices up 12.7pc year-on-year, the fastest annual rise since May 2015. "The momentum in residential property prices remains formidable," says KBC's chief economist.
Yet Central Bank Governor Philip Lane, the economist's economist, immediately warns of another property crash.
Blaming increasing housing supply (I know, I know; the rest of us think that's a good thing), he says there's a 'material risk' the market will fall in the next couple of years. He also cited the fact that fewer people can now afford a mortgage and added "our rules are beginning to bite more severely". He meant this as a good thing.
It's confusing. What is true though is that people often don't do what economists expect of them and the entire landscape can change at the stroke of a politician's pen and the abacus will have to be dusted down once again.