A recent question mentioned that directors of self-managed apartment blocks are not entitled to remuneration. Does this also apply to management companies for common areas, where all the properties are free standing on their own site and the common areas such as parking, green areas and flower beds are owned by the company? Where can I review the relevant legislation or ministerial order? We are a small management company servicing 25 houses. I act as chairman in a voluntary capacity. We do pay a small annual honorarium to the secretary which is voted on at the agm each year and in light of the article "Untangling apartment building management", I have a concern that we may be behaving illegally. I am sure many people would be interested in an expanded article.
In short, yes is the answer to the first paragraph of your query. All legislation is free to view online at irishstatutebook.ie.
Your development is indeed a multi-unit development with common areas. The specific affirmation you are seeking is as defined by the Multi-Unit Developments Act 2011 (MUD Act) Section 1.
Property Service Providers (PSPs) are regulated by the Property Services Regulatory Authority (PSRA) following enactment of the Property Services Regulations Act 2011 (PSRA Act) and (Client Moneys) Regulations 2012.
I would draw your attention to Part 3, Section 28 (2) of the PSRA Act which clearly states the consequential ramifications of service provision without a licence:
“(2) A person, other than a licensee, who contravenes subsection (1) is guilty of an offence and liable –
(a) on summary conviction, to a class A fine or imprisonment for a term not exceeding 12 months or both, or
(b) on conviction on indictment, to a fine or imprisonment for a term not exceeding five years or both”.
Part 13, Section 89 of the PSRA Act, “Investigation of persons other than licensees” outlines the regulator’s role for the appointment of an investigator to review and report on the activities of a person who is suspected of providing a property service without a license.
The crux of the issue for directors is whether or not there is consideration, meaning payment, benefit in kind or any material gain such as the owner’s management company (OMC) striking off the service charges due from a director for their efforts. Section 2 of the PSRA Act reads: “property service” means the provision, for consideration, in the State, in respect of property located within or outside the State, of any of the following –
(a) the auction of property other than land,
(b) the purchase or sale, by whatever means, of land,
(c) the letting of land (including a letting in conacre or for the purposes of agistment), or
(d) property management services”.
As you can see from the above, (d) is the relevant category of service in this query and confirms that your board is acting in contravention to the legislation brought forward so as to protect consumers from inappropriate activity in the property market. A director of an OMC in receipt of consideration must hold a D licence no matter how good their intentions may be. A director may provide a management service provided there is no remuneration in return, thus the rational of appointing a licence holder. Property Managers are appointed by boards of OMCs mainly due to the onerous work that is involved in daily management and secondly to avail of their expertise in streamlining management delivery and obtaining valuable services.
The oversight would have been raised by a qualified accountant in reviewing the year end audit pack for any OMC that chose not to avail of an audit exemption, thus providing a service to their clients and a sound argument for having a third party review the books and records of an OMC each year.
Paul Huberman is a Chartered Property and Facilities Manager and a member of the Society of Chartered Surveyors Ireland scsi.ie
Inheritance tax
My father died two years ago and left all of his assets to my mother. A market valuation of the properties was done at the time and my mother had no tax liability. However, if my mother sells some of the properties, does she pay capital gains tax on the original price the property was bought for or the recent probate valuation? Moreover my mother has now made a will and has left all of the assets to her children; after her time even with the current €280,000 threshold there will be a tax liability. My question is this; if the children decide to sell the properties or some of them, which valuation do they go by? The original price the property was bought (one property was bought for £5,000 and is now worth €300,000) or the first probate valuation or the second probate valuation, for capital gains tax purpose and for CAT tax purposes.
Query 1: Mother’s inheritance from father
Based on the assumption that your father and mother were married prior to your father’s passing two years ago; the spousal exemption would have applied to your mother’s inheritance from your father. This means your mother would not have been subject to Capital Acquisitions Tax (CAT) on her inheritance of the assets.
For Capital Gains Tax (CGT) purposes, tax law deemed that your mother acquired the assets from your father on the date of death and at the market value of the assets at the date of death. The market value at the date of death will be the base cost for future disposals. A liability to CGT arises when the proceeds (less incidental costs of sale) is greater than the market value on date of death. CGT is levied on this gain at a current rate of 33 per cent.
Query 2: Children’s future inheritance from mother
As the children will inherit all of your mother's assets upon her passing, in general, CAT (current rate 33 per cent) will be levied on the market value of the assets at the date of grant of probate (less any liabilities, costs, expenses and consideration) less the relevant Group threshold. The CAT Group A Threshold of €280,000 is a lifetime limit and applies to reduce the total aggregate gifts and inheritances received from a Group A threshold disponer (ie previous gifts received by you from your parents, since December 5th 1991, will be computed along with any subsequent gifts/inheritances). The new Group A threshold of €280,000 applies to gifts and inheritances taken on or after October 14th, 2015.
Query 3: Children’s future disposal of inherited assets from mother
As mentioned above, a liability to CGT arises when the proceeds (less incidental costs of sale) is greater than the original purchase price (plus purchase costs). CGT is levied on this gain at a current rate of 33%. The original purchase price of the assets in your scenario, under tax legislation, will be deemed to be the market value of the assets at the date of your mother’s death.
Ciara McEntee is a tax consultant with Baker Tilly Ryan Glennon
Change of use
I'm starting my own business within the next two years. I've got a concrete garage which is sound, but the roof is made of asbestos and is in bad repair. I'm thinking of converting the garage into a kitchen. Obviously it would need a new roof but I'm wondering if there was any other regulations or permission I need to have a kitchen in there. It already has access to water and electricity.
Planning permission is required for all developments, including the change of a building’s use, unless it is classified as ‘exempt development’ under the Planning and Development Regulations. I note you are starting your own business and that you wish to convert your existing garage into a kitchen, which I assume is for commercial use.
The conversion of a garage into a kitchen is therefore not classified as ‘exempt development’ under the Regulations. You will be required to prepare a planning application for a ‘change of use’ from garage to kitchen and lodge the application with your local planning authority.
Given the proposed works relate to commercial use, you will also be required to prepare the following applications and submit these to the local Building Control Authority for review and approval: Fire safety Certificate Application; Disability Access Certificate Application; and a Commencement Notice (in advance of building works commencing on site).
With regard to the removal of the asbestos roof, it is recommended that specially trained asbestos removals contractors be engaged for this part of the project.
There is a risk that the fibres within the asbestos roof cladding can become air borne and may be inhaled by humans, which can result in cancer causing illnesses. It is not permitted to use, re-use, sell or supply asbestos containing materials or products. I recommend that you seek professional advice prior to the commencement of the above project and wish you every success in your endeavours.
Andrew O’Gorman is a Chartered Planning and Development Surveyor and a member of the Society of Chartered Surveyors Ireland scsi.ie
