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The Ryan review and Home Economics with Sinead Ryan

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Working from home

Working from home

Working from home

I inherited a house from my elderly aunt 15 months ago. It is in some disrepair and I have had it on the market since I took ownership of it, with no luck. It is in a rural location and would need a bit of money spent on it which I don't have.

Although I have dropped the price twice, there is little interest in it and the estate agent isn't hopeful.  It's on the market for €126,000, which is undervalued. My problem is this: I'm being told I need to pay inheritance tax on the property. While I understand that, Revenue don't seem to be willing to wait until I sell it - I don't live in it or rent it out and I don't have the money to pay it before this. What can I do?

 

SINEAD: First of all, yes, you are liable for inheritance tax which is a punitive 33pc over the tax free allowance allowed for aunt/nephew (Class B) which is €30,150. Therefore your bill is 33pc of €126,000 less €30,150, i.e. €95,850 which equals €31,630.50, calculates Louise Carey of taxconsultant.ie.

Tax is charged on the valuation date. In the case of an inheritance, this is generally the date of death, or the earliest date on which a personal representative can retain the inherited property for the beneficiary.

A surcharge is chargeable for late filing of a return and in your case this is 10pc of the tax due. Interest also arises for late payments and if Revenue thinks you've sold for less than market value they can challenge this. While I understand your predicament you are caught between a rock and a hard place.

Revenue is open to phased payments but possibly with the penalty of interest, according to Carey, but I can't see them allowing you to wait until the sale of the house to begin them. In the first instance, I would get in touch and explain your situation, in writing.

 

I am self-employed and work from home. Due to a new project I need to take on someone to assist me and they will work for three days every week from my dining room for a few months. Are there any implications regarding house insurance I need to have regard to? I am paying her as a contractor for hours worked.

SINEAD: Thank you for asking this interesting question. The responsibility of house insurance is often ignored until there's a claim and people are often left confused that it isn't honoured when they assumed it would be.

Anything which changes the circumstances of cover may be a 'material risk' and it's vital to inform your insurer. In this case however, you are drawing a fine line between normal household insurance and business cover.

Brian McNelis of the Irish Brokers Association explains: "The first thing is to contact your insurer. Some policies allow a home office to be noted but exclude any liability arising from the use of it e.g. someone visiting the house for business purposes.

"If they have it noted and a fire arises, the part occupancy of the house as an office will not affect payment of claim. The insurer may or may not cover business equipment within a household policy."

Separately though, you may have another issue as McNelis adds: "I would recommend you take out a separate office policy in addition to noting the home office. This is important because there may be different interested parties e.g. a company operating the business. In addition, as there is now an employee on contract, the office policy will include Employers Liability cover.

"Premiums are primarily based on contents sums insured with all other main covers such as employers and public liability included automatically. Minimum premiums are around €350 to €450 subject to 5pc Government levy."

The Ryan Review

SO Super Mario cranked up the printing presses after all. Too little too late or just the kick the Eurozone needs? Time will tell.

I for one don't find it comforting he has already indicated that, even with the massive spend of €60 billion a month, he doesn't believe it is enough to have the inflationary impact to reach the ECB's 2pc target - never mind sending us into hyper-inflation as the Germans seem to think.

Those hoping to get on the property ladder should not ignore this seismic event. While handing over cash to banks might indeed encourage them to trickle it down to the great unwashed (and there's no guarantee it will), there's another impact which has just made it harder for first-time buyers, even after Central Bank Governor Patrick Honohan's swipe at them on deposit levels. Saving €30,000 say, is hard enough as most young couples can testify, but with potentially a long period of deflation, the prospect of negative interest rates is now a real possibility. Some banks in the EU are already charging for minding money and despite the big quantitive easing (QE) train rolling down the tracks, this threat hasn't gone away.

Banks don't like deposits coming from the bank of mum and dad, credit union borrowings or any dodgy financial instruments.

They want to see it, preferably, coming from a nice, safe deposit account saved over a number of years.

So, how many will be prepared to save €32,000 to build up savings of €30,000? QE might solve one problem but the law of unintended consequences may create quite another.

Indo Property