Sunday 25 February 2018

Home economics: House insurance application question

Answering your property questions

A reader is suprised by a bankruptcy question in relation to house insurance. Photo: Getty Images.
A reader is suprised by a bankruptcy question in relation to house insurance. Photo: Getty Images.
Sinead Ryan

Sinead Ryan

I'm filling out an application form for house insurance and notice a question which asks if I've ever been made bankrupt. I was, a few years ago in the UK, but I'm wondering why they need to know and if I could be refused insurance.

Increasingly it seems house insurers are asking this question, which, unfairly in my view, often categorises such applicants with those who have a criminal conviction.

Jonathan Hehir, of www.insuremyhouse.ie, says securing cover for someone who has been bankrupt can be tricky and often depends on the jurisdiction of the bankruptcy. "The purpose of insurers ascertaining whether or not an applicant had been made bankrupt is unclear as I don't see any evidence to support the contention that an individual's bankruptcy status will have a bearing on their likelihood to claim in the future.

"While a history of criminal convictions is viewed as a sign of an unsavoury character and someone who might be more likely make a fraudulent claim in the future, asking similar questions for someone facing bankruptcy due to the economic downturn does seem inappropriate.

"Unfortunately, my experience is that the majority will either decline outright or will review each application on a case by case basis – where factors such as when and where the person was declared bankrupt, and his/her occupation are asked.

"However, there are those happy to take on bankrupt clients and you should ask a broker to shop around for you."

Property Tax valuation

I paid my Local Property Tax when it was due, valuing my house in the lowest band.

I have now received a letter from Revenue disputing this valuation.

I'm a bit annoyed. What can I do?

Revenue announced it would be rooting out "outliers" around now – those who deliberately undervalued their properties to avoid paying a higher tax.

While they are not suggesting (yet) that you have done this, as a self-assessed tax it is up to you to prove you paid the correct amount.

Revenue told me: "If we have a concern about a self-assessed valuation, we will ask the property owner to support their valuation with evidence of the information sources on which they based their self-assessment.

"This information will be reviewed by Revenue and if there isn't agreement, revenue may raise an assessment.

"The taxpayer can appeal the assessment to the Appeal Commissioners.

"If a person undervalues their property, they will be liable for the additional tax due and interest on that amount."

There is also room in the legislation for additional penalties also and sanctions placed when the house is sold.

My advice is to get an expert in. If you believe you have valued correctly, get proof from a couple of estate agents, ask neighbours how they valued and check the property price register for recent sales to back up your case.

The Ryan Review

I was asked by someone recently whether the tax relief available for someone providing 'digs' in their house still applies.

Happily it does, and is a great way to make some extra money or help out with mortgage expenses.

It is called the "Rent-a-Room Scheme" and is extremely straightforward.

A couple of ground rules apply: Firstly, you can't rent the room(s) to your own adult kids. Shucks.

Also, if you're an employee of a company who pays you to put clients up, then you can't avail of that income under the scheme either.

You can earn up to €10,000 tax free a year by providing a bed and/or board, laundry, etc as you wish. You must live in the house yourself, a Principal Private Residence, and you must not be considered a "Landlord" in terms of the Private Residential Tenancies Board, with whom you do not need to register.

That absolves you of the €90 charge and also means you don't have to provide a rent book or even ensure the room meets minimum standards.

However, it's a good idea to set out what you expect of a tenant and your responsibilities, preferably in writing. Sharing a house is hard work, so make sure you're agreed on common room usage, utility bills etc.

You apply by declaring the income on a Form 12 at year end and the income is exempt from tax, PRSI and USC. If you are living solely on benefits, it may be means tested against that, but not for pensioners.

Indo Property

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