What to do with a house that has been empty for 15 years?

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done4now

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Apologies if this isn't the correct forum but wasn't sure what was the best fit for it.

My father owns a house (4 bed, 2 bathrooms) in the centre of a small town (pop 3k) in the west of Ireland. He had it rented out as an office to a company for many years until they moved out and now about ~15 years later the house is still vacant. The house could do with a fair bit of modernisation as there is some raising damp in the inner blockwork that needs to be looked at and the kitchen and bathrooms are so old they are nearly back in fashion. For various reason's my father hasn't done any work to the house even when I've offered to payroll it.

It's also a 3 hour drive away from me so it isn't very convenient for me to get to.

I see there is certain grants available for the house to be renovated for either my father to make it his primary residence (can pretty much say he has no plans to do so) or for it to taken as social housing for X amount of years. I also can privately fund it but that goes into me funding an asset that isn't mine which I'm more than happy doing but could end in tears later down the line. However he did mention that he would be willing to give it to as early inheritance but I'm not 100% sure on that seeing that if I did want to buy my own home (currently renting on very favourable terms) I would be disqualified for first time buyers grant.

So my plan at the moment is to get on to the council to see what is need to get the grants but after that I'm not sure what is the best thing is to do to get the house ready to be rented out.

Any advise is greatly appreciated.
 
Would your father not just sell it and give you the money to help you buy a house?

That seems the far cleanest solution.

I don't think you should buy/acquire a house which you don't intend to live in.
I don't think you should spend your money doing up a house which is not yours.

Brendan
 
As it's his second property he would have to pay CGT which is something he'd like to avoid.

I have the means to buy my own home between getting a mortgage and savings without any help but haven't for various reasons.
 
done4now said:
he would have to pay CGT which is something he'd like to avoid
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If the main objection is paying CGT, then leave it empty until he passes away & the CGT will die with him.

In the meantime, sort out drains / gutter / roof so the structure doesn't deteriorate; run a dehumidifier & some heating internally on a timer and do regular inspections. Make sure water is turned off. You should also check insurance as its unoccupied.
 
DannyBoyD said:
If the main objection is paying CGT, then leave it empty until he passes away & the CGT will die with him.
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He has around 20k in savings so he could do an investment himself so would it not be worthwhile to do up the house in the mean time to earn an income off it with current rents at €1k-€1.5k per month? So if he was to live for another two years he'd have made his money back.

DannyBoyD said:
In the meantime, sort out drains / gutter / roof so the structure doesn't deteriorate; run a dehumidifier & some heating internally on a timer and do regular inspections. Make sure water is turned off. You should also check insurance as its unoccupied.
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His brother lives 5 minute walk away and this is what he is meant to be doing but I'm not sure if anything has been done tbh. I guess the best course of action is for me to get a copy of the keys and get all this set up.

T McGibney said:
Unless it's in a very good location or he bought it very cheap initially, it's hard to imagine that it's sale will generate a significant CGT liability.
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Not 100% sure on the ins and outs of it but I think he bought the land off his own father 40+ years ago and his brother and him built the house along with the two other houses next door. Which one belong to his brother and the other to his sister but both of these houses are rented out. So I'm guessing CGT would be on a high percentage of the house.

Location is 600 meters from train station and 500m from the post office with estates and shops all around it so very well located.
 
done4now said:
For various reason's my father hasn't done any work to the house even when I've offered to payroll it.
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done4now said:
I have the means to buy my own home between getting a mortgage and savings without any help but haven't for various reasons.
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This does indeed look like a human challenge as Coyote says.

He has gone 15 years without rent.
It has deteriorated more than it would have done had it been occupied.

The "various reasons" must be very various to compensate for the financial loss.

I can understand that a person might have good reasons not to buy a family home, but I can't understand why someone would let a 4 bedroom house go empty for such a long time.

Brendan
 
Believe me I have asked myself the same question for years and I've done the maths on the lost income in that time as it money he could of done with. Back about 4 years ago he wasn't in a position financially to do anything with the house until I helped him clear that debt. He kept saying it needs X done before it can be let out and he'll get his brother to get a contact of someone. Only problem his brother is exactly like him and nothing gets done.

The fault I have had is believing he'll sort it out himself but as we can see that hasn't happened and hence why I'm stepping in.

Anyway lets now focus on the mistakes made.

From my own view I guess the things I need to do is
1. Get a copy of the house keys
2. Visit a house and see what is and isn't working
3. Maybe arrange a visit from an estate agent to see what the current value rental income is
4. Arrange with general contractor/surveyor to see what state they think the house is in.
5. If the costs are high get on to the council about the Repair and Leasing Scheme
 
You left out one important thing - get any agreement in writing.

Dont wish to disrespect your parent, but they were sitting on an asset yet borrowed money from their offspring to clear a debt.

I'd be cagey about paying out any more money without a clear written agreement & even then I'm wondering if you're taking on trouble.
 
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done4now said:
Not 100% sure on the ins and outs of it but I think he bought the land off his own father 40+ years ago and his brother and him built the house along with the two other houses next door. Which one belong to his brother and the other to his sister but both of these houses are rented out. So I'm guessing CGT would be on a high percentage of the house.
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It's unlikely to be too high. The highest it can be is 33% and that will reduce sharply once indexation is applied.

If you're making any significant decisions on this, it would be worthwhile getting proper professional advice.
 
Did he asked you to step in? You mentioned that if he lived another 2 years, he would make his money back? How old is he? Is he in good health?
 
DannyBoyD said:
Dont wish to disprespect your parent, but they were sitting on an asset yet borrowed money from their offspring to clear a debt.
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Just to be fair they never asked me or brought it up I just made it my business to find out the situation and paid it off rather than paying the interest to the bank. They also helped me out financially when I was at college so this was my way of repaying them.

T McGibney said:
If you're making any significant decisions on this, it would be worthwhile getting proper professional advice.
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By professional advise do you mean to get in contact with a solicitor?

Premos said:
Did he asked you to step in? You mentioned that if he lived another 2 years, he would make his money back? How old is he? Is he in good health?
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He offered to give me the house as part of early inheritance (instead of the current situation where I'm meant to get a % of it with my siblings) but I'm not massively keen on this idea. In his late 70s and otherwise good health but anything can happen.
 
Then if you don't want it, I would encourage him to sell it, boost his saving so that he might live a more comfortable life. Becoming a landlord in his late 70s, having spend all his cash in renovation might not be the best plan for him. Instead of looking at the rental market, it might be good for him to get a clear idea of what the cgt liability could be.
 
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As a worked example let's assume the house was built in 1983 at a cost of IR£23622 or €30,000 and it sells for €100k in 2023. A nominal gain of €70k.

You can get indexation relief (see here) at a factor of 2.253 from the 82/83 tax year so an adjusted gain of €31,069. Assume solicitors' and auctioneers' costs of €3,000 and personal CGT exemption of €1,270

Cost: €30,000
Sale price: €100,000
Gain: €70,000
Indexation factor: 2.253
Adjusted gain: €31,069
Less expenses: €3,000
Chargeable gain: €28,069
Less personal exemption: €1,270
Taxable gain: €26,799
CGT @33%
CGT: €8,843

You can play with the numbers a bit but I just don't see CGT being a make-or-break in any decision on what to do here.

PS: if my assumptions or calculations are off please correct and I will edit.
 
Just make sure there are no planning permission issues if the house was changed from residential to commercial in the past.

There are grants available to do up a derelict house but my understanding is that you can't simply sell the house afterwards so understanding what those restrictions are is important

However, my view is that he should just sell the property as is if possible
 
NoRegretsCoyote said:
You can get indexation relief (see here) at a factor of 2.253 from the 82/83 tax year so an adjusted gain of €31,069.
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Just with regard to indexation, didn't that go in 2002 or thereabouts? Surely then the reduced capital gain factor would only apply on gains from 1983 to 2002. Gains from 2002 to 2023 would be fully taxable, would they not?
I'm just surprised the indexation relief would reduce the gain so much given that 20 years of that period from 1983 was not indexed?
Surely indexation does not apply to the full gain ?
 
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