As with purchasing a home, anyone intending on selling their home is also faced with a number of issues which must be considered before they can proceed. Such issues include the method of selling the property, that is, via auctioneer or privately. The question of your title deeds must also be addressed - where are they? Are they held as security for a loan? Do I have to pay Capital Gains Tax? Do I have to get retention planning permission for that extension I built a year ago? Pierse & Fitzgibbon Solicitors provide our clients with a full legal service thereby reducing the stress and worry suffered by our clients due to such issues.

Method of selling

One of the first questions a Vendor must ask is how I am going to sell this property? Do I get an auctioneer? Do I sell privately? What do I do? It is common for Vendors to consult with a number of auctioneers and see firstly, what value they would place on the property and secondly, what are the fees for their services? Auctioneers’ fees are generally based upon a percentage of the selling price of the property. Once you have chosen an auctioneer, it is important to fix his/her fees and become aware of what exactly you are getting for those fees, for example, do they include advertising fees or are they extra?

Title Deeds

Very often the title deeds to the property in sale are held as security for a loan in a lending institution. They may be held on equitable deposit or as a legal mortgage. An equitable deposit of title deeds is where a borrower lodges his/her title deeds, for example, a Land Certificate with a lending institution as security for a loan, but there is no written statement regarding same. Such deposits do not appear as a burden on a folio. A legal mortgage on the other hand is in writing and is usually registered as a burden on a folio, therefore it can be clearly seen that a specified lending institution has a charge over the property.

It is important to know where the title deeds are kept and to ascertain if the loan which they secure is paid off. If the loan is fully paid off prior to selling the property, a deed of discharge will need to be obtained from the lending institution whereby they will no longer have a charge over the property. If the loan is not paid off prior to the sale, it is common for the Vendor’s solicitor to undertake to clear the loan from the proceeds of the sale and thereafter remove the charge from the property.

Capital Gains Tax

What is Capital Gains Tax?

Capital Gains Tax is a tax on the gain arising on the disposal of an asset by a chargeable person to include land, buildings and shares in a company on or after the 6^th of April, 1974.   As it is a tax on disposals, gifts also come within this scope including Voluntary Transfers.   The standard rate of tax is now 22%.  Certain assets are excluded from the tax and some gains are relieved from the tax.

Who is a chargeable person?

A chargeable person is any person who is resident or ordinarily resident and domiciled in the State for a year of assessment.   This person is liable to tax or chargeable to tax on chargeable gains accruing and all disposables of chargeable assets made during that year.   Everyone is liable to Capital Gains tax on the disposal of Irish Land.

What is the disposal of assets for the purpose of Capital Gains Tax?

A disposal of an asset includes:-

• A transfer by sale, exchange or gift.
• The settlement of an asset on Trustees.

Disposals that are not made at arms length, for example gifts, are deemed to have been made at the market value of the asset at the date of disposal.

Annual Exemption.

There is an annual exemption of €1,270 per individual which is not transferable between spouses.   The annual exemption applies to individuals only.

How do I calculate a gain?

The Capital Gain is the difference between:-

(a)  The consideration for the disposal of the assets (or the market value of the assets at the date of disposal, if it is a gift) and

(b)  The cost of acquiring the asset, or its market value if acquired by way of a gift, and any expenditure incurred on its improvement.   This figure may be adjusted to account for inflation.   Incidental costs of making the disposal may also be deducted. 

What are incidental costs?

Incidental costs are allowable deductions when calculating the gain on the disposal of an asset and can include the cost of acquiring the asset, for example surveyors, stamp duty and legal fees; the cost of improvement works completed on the property; and the costs connected with the disposal of the asset, for example legal fees, advertising etc.

Are there any exemptions?

Principal Private Residence Relief

S. 604 of the Tax Consolidation Act, 1997 provides for an exemption from Capital Gains Tax in relation to any gain arising on the disposal of the main residence of an individual. It further allows for grounds of up to one acre (exclusive of the site of the house) around the house to be exempt. If there is more than one acre of ground around the house, then that part of the ground that is taken into account is the part which would be most fitting for occupation and enjoyment with the residence.

If you have two or more residences, you can only nominate one house to qualify for the relief. If you only use part of the house as your main residence, for example, in a situation where you exercise a business from your home, this relief from Capital Gains will only apply to that part of the property you use as your main residence.

House occupied by dependent relative

The principal private residence relief will also apply to a profit arising from a disposal of a home owned by an individual, but occupied by a dependent relation as their only principal private residence.

Planning

Planning issues can arise where one has built an extension onto their home, but failed to obtain planning permission for same and the development is not exempt. If one then wishes to sell their home, solicitors for the purchaser will invariably require a Certificate of Compliance with Planning Permission. The vendor clearly cannot accede to this request, and may then need to apply to the relevant planning authorities to obtain retention planning permission.

BER Certificates

What is a BER Certificate?

BER stands for Building Energy Rating. A BER certificate informs you of how energy efficient your home is. There is a scale of A to G: A is the most efficient and G is the least efficient.

A BER Certificate remains valid for up to 10 years so long as there is no significant change to the house that could influence its energy performance.

A provisional BER may also be given and this lasts for 2 years. A provisional BER is one that is often issued for new houses based upon the house plans and building specifications.

When is a BER Certificate required?

As of the 1st of January 2009 a BER certificate is compulsory for all homes, new or existing, being sold or rented. Therefore, if you are purchasing a home, you are fully within your rights to ask the Vendor for a BER Certificate. All new homes are now required to have a BER Certificate, even where it is not being sold.

BER Certificates are also required for new non-domestic buildings for which planning permission was applied for on or after 1st July 2008. There are transitional BER exemptions in place for those new non-domestic buildings for which planning permission was applied for on or before the 30th June 2008. However, it should be noted that such transitional BER exemptions will only apply where the new non-domestic buildings concerned are significantly completed by the 30th June 2010.

BERs will be carried out by specially trained BER assessors, registered by Sustainable Energy Ireland (SEI). Such assessors are trained under the National Framework of Qualifications and it is an  offence for any person who is not so trained and registered with the SEI to carry out a BER Certificate.

Steps in Selling a Property

Steps to be followed by your Solicitor in the Sale of your property:

1. Obtain instructions from auctioneer and/or Vendor (you).
2. Obtain Title Deeds from Vendor or Lending Institution (this may take 2 to 4 weeks).
3. Check position re Planning, Marital Status etc.
4. On receipt of Deeds, prepare and send Contracts to Purchaser’s solicitor.
5. Await return of signed Contracts and balance of 10% Deposit from Purchaser’s solicitor.
6. Arrange with Vendor to sign Contracts and agree a closing date.
7. Return signed Contract to the Purchaser’s solicitor.
8. Reply to Requisitions on Title -a long list of queries on the title to the property as asked by the Purchaser’s solicitor.
9. Arrange to complete – send Deeds to Purchaser’s solicitor and await monies.
10. On exchange of Deeds and receipt of balance of purchase monies, the keys are released to the Purchaser.
11. Redeem( pay off) the Vendor’s Mortgage from the purchase monies.
12. Pay auctioneering and Legal fees, VAT and Outlay (money paid out on the Vendor’s behalf)
13. Pay any remaining balance to the Vendor.