Our experts answer readers questions

What should I be thinking about when downsizing?

Q Now retired, I am downsizing. I intend buying a small house, then putting my prime residence on the market. I will not move into the new house until my own residence is sold. Unfortunately, in the current market, selling my house could take time. When I eventually move, could there be capital gains implications? Will I have to pay stamp duty a second time?

A The concept of downsizing remains a popular one and has obvious advantages. However, buying and selling property needs to be planned carefully, particularly when you plan to sell one property to acquire another. There are a number of issues that need to be addressed before progressing further.

The first one is by first purchasing a second property before disposing of your main residence property, you will have to maintain, heat and insure two properties as opposed to just one. You will have to pay the second home property charge. Moreover, you do leave yourself open to losing your capital gains tax exemption on disposing of your main residence when you come to sell.

From an investment point of view, assuming you are not borrowing to purchase the smaller property, you will also be sacrificing whatever rate of interest you are currently getting on the funds. As you quite rightly say, in the current market, selling your own property could take some time and you may well find yourself with far more costs and headaches than you bargained for.

It may be worthwhile to consider selling your own property first and availing of the capital tax exemption on disposing of your single primary residence, assuming the property is not located on a site of larger than 0.40 hectares (1 acre). Once the contracts have been signed, I would consider renting for a short period.

This would allow you sufficient time to look closely at the market and find the ideal smaller property. With respect to stamp duty, if you purchase a new house under 125sq m, there is no stamp duty. If it is a second-hand property, the prevailing rates of 1 per cent on purchases up to a value of €1 million will apply. I suspect the sum involved may well be relatively small, as you are seeking to purchase a smaller property.

If you are determined to first acquire a smaller property, you could, once you complete on the deal, consider renting it out while you try to sell your own house while residing in it. This would have the advantages that you would not jeopardise your capital gains tax exemption on disposal, while at the same time getting some rental income.

Have your property valued by someone who is familiar with the market in your area and seek their advice on how long it will take to sell your property. This should help inform you of how long you might need to rent your smaller property before you wish to move into it.

Personal tax matters can be complex and before proceeding any further, I would strongly advise that you seek the advice of a qualified professional accountant and/or a solicitor.

Gerard O'Toole is vice chair of the Western Region Council of the Society of Chartered Surveyors Ireland.

My old pipes may have a leak

Q The water pipe serving my house, built in 1930, is 45ft long. I am concerned that there is a leak in the pipe and would like to have it inspected and, if necessary, repaired, before the water meter is installed. Is there technology available that can determine, without interfering with the ground surface, whether or not there is a leak? Secondly, will the water meter be operational, ie measuring my consumption, from the date of meter installation or, in the interest of equity, will there be a common switch-on date applicable throughout the country?

A Your water pipe, now 82 years old, is possibly steel, fibre cement, copper or even lead. If it’s lead, it should be fully replaced anyway. Given the age of the property, my advice is to replace the pipe with a new NSAI-standard water pipe, regardless of what you find, to ensure quality, quantity and pressure after the meter is installed. Your original pipes will be at, or near, the end of their useful life, so you are right to be concerned about possible leakage. Try attaching a length of clean clear plastic hose to a tap, locating it as high as possible vertically from that point and filling it to a marked level. Turn off the mains and all taps but the one on the hose and check whether the water level drops. If so, you have a leak. The time taken to fall may give an indication of the severity of a leak somewhere in your mains system below the highest level of your hose. A plumber can carry out this check for you. All water loss on your side of the meter is a problem worth resolving – not just because it is proposed that you will pay for usage, but because of potential damage to your property.

There are a number of specialist companies providing an assured leak detection and replacement service.

Your council water department or local plumber may help too.

Fergus Merriman is member of the Building Surveying Professional Group of the Society of Chartered Surveyors Ireland.

Three options for landlording while abroad

Q I am renting out my apartment and am going to Australia for a year as I have found work there. I’ve never been a landlord before and am not sure how to go about the whole thing – finding tenants, contracts etc. What do I need to do?

A You have three options with regard to rental and management of your apartment while you are abroad. The first is to let the property yourself and perhaps ask family to assist you with maintenance and tenant issues that may arise during the tenancy while you are abroad. You would need to advertise the property, conduct viewings to find suitable tenant(s) and sign a letting agreement.

Your tenancy must also be registered with the Private Residential Tenancies Board (PRTB), see prtb.ie.

The second is to use an experienced letting and management agent to handle the arrangements and management of the apartment.

The third option is a combination of the two above, ie, use a letting agent to find a tenant, to prepare an inventory and to prepare all the contractual paperwork, and then perhaps you could ask a family member to handle any maintenance/tenant issues that may arise during the tenancy.

The main reasons for embarking on options one and three above would be if your cash flow is very tight, or if you wish to handle a lot of the elements of the letting yourself.

The logical option, if you can afford it, it is to use option two, which will relieve you of any worry or concerns while you are abroad.

A good letting and management agent will take care of the entire process of finding tenants and handling all issues relating to the apartment on your behalf while keeping you fully appraised.

Furthermore, the agent’s fees are tax deductible.

If you are using an agent, it is a good idea to check they are a qualified and experienced professional.

Fergal Hopkins is an associate member of the Royal Institution of Chartered Surveyors and the Society of Chartered Surveyors Ireland.