Funds release after house sale

pasquale83

hi all,

I was gathering information on the process of selling a house.

I've heard that the funds are released from the solicitor after 30 days if the revenue office doesn't get back with any objection. is that true?

do you have any more detailed information on this?

thank you for your help!

busylady

Funds from a sale would usually be released within a couple of days after completion.

pasquale83

busylady wrote: »

Funds from a sale would usually be released within a couple of days after completion.

can it be something related to CGT or the fact the the owner is a non resident individual?

uck51js9zml2yt

busylady wrote: »

Funds from a sale would usually be released within a couple of days after completion.

Or couple of hours. We sold and bought the same day.

pasquale83

busylady wrote: »

Funds from a sale would usually be released within a couple of days after completion.

for completion you mean the closing date?

GGTrek

pasquale83 wrote: »

hi all,

I was gathering information on the process of selling a house.

I've heard that the funds are released from the solicitor after 30 days if the revenue office doesn't get back with any objection. is that true?

do you have any more detailed information on this?

thank you for your help!

I believe you are talking about a letter of CGT clearance for non resident investors. This is a major pain. Yes approx 30 days should be the standard reply time from Revenue, but I have heard some bad stories of up to 3 months wait with a lot of back and forth.


Your solicitor will ask for it to cover his back:
https://www.lawsociety.ie/News/News/Stories/disposals-of-property-for-non-resident-vendors/

Bold Abdu

As a non-resident, it's a Letter of No Audit that will be required from Revenue.

So if you were a non-resident landlord and you sold today, you should make sure all your IT returns (incl. 2018) have been filed and paid. Same with CGT.

I recently got a Letter for a client in about a week so it can be a quick process.

GGTrek

Bold Abdu wrote: »

As a non-resident, it's a Letter of No Audit that will be required from Revenue.

So if you were a non-resident landlord and you sold today, you should make sure all your IT returns (incl. 2018) have been filed and paid. Same with CGT.

I recently got a Letter for a client in about a week so it can be a quick process.

Can I ask you how long it took after the CGT return was filed? For a non resident investor this usually means filing a Form 11 right after completion and then paying the CGT. Is this correct?

pasquale83

GGTrek wrote: »

I believe you are talking about a letter of CGT clearance for non resident investors. This is a major pain. Yes approx 30 days should be the standard reply time from Revenue, but I have heard some bad stories of up to 3 months wait with a lot of back and forth.


Your solicitor will ask for it to cover his back:
https://www.lawsociety.ie/News/News/Stories/disposals-of-property-for-non-resident-vendors/

GGTrek, is the indemnity fully refundable upon receipt of Letter of no Audit?

I guess not all funds should be retained on the Solicitor's account, just a sum that should cover taxes, is that correct?

GGTrek

pasquale83 wrote: »

GGTrek, is the indemnity fully refundable upon receipt of Letter of no Audit?

I guess not all funds should be retained on the Solicitor's account, just a sum that should cover taxes, is that correct?

It is the usual Irish mess due to a mix of incompetence and abuse of power of the Irish government departments (at all levels), a few solicitors only retain the difference between purchase price and sale price, but the vast majority retain all the proceeds of the sale. The whole process has no statutory basis and it is an abuse of Revenue that could be seriously challenged in court if the money is serious enough (problem as usual are the massive legal fees in Irish court and the fact that Revenue using taxpayers' money will take the court case up to the Court of Appeals as they have done very recently with another issue about NPPR).


Look at the last discussion meeting minutes between the Law Society and Revenue:
https://www.revenue.ie/en/tax-professionals/talc/main-talc-minutes/2018/talc-minutes-010518.pdf
"Item 7 – Letters of “no audit”
*Revenue is reviewing the procedure for issuing a letter of “no audit” to solicitors or executors to facilitate the release of funds to beneficiaries (i.e. trusts or inheritances) and in relation to property sales by non-resident vendors. While the procedure appears to be a long-standing practice that is availed of by some solicitors, it does not have a statutory basis. Revenue expects to clarify their position at the next meeting.
* Practitioners noted the importance of the letter of “no audit” procedure to solicitors/executors who risk incurring personal liability for tax due if the funds are released and a tax liability is subsequently identified. Currently, in the absence of a letter of “no audit” funds are being retained for lengthy periods, which is inconsistent with Solicitors Regulations."



More recent one:
https://www.revenue.ie/en/tax-professionals/talc/main-talc-minutes/2018/talc-minutes-190618.pdf
"Item 3 – Letters of “no audit” procedure update
• Revenue has examined the history and prevalence of requests for letters of “no audit”. It appears that requests are made as a matter of routine in some cases, and in a broader range of circumstances than where secondary liability is imposed by the legislation. From Revenue’s perspective, issue of these letters is resource-intensive and arises from long-standing practice without a statutory basis.
• From practitioners’ perspective, the central issue is the availability of letters of “no audit” where secondary liability is imposed on the agent by legislation, i.e. where there is non-resident beneficiary or donor or a non-resident vendor. There are differing views on whether a solicitor can be an agent of their client. Practitioners would welcome the opportunity to
discuss and identify practical ways to address the current impasse, which is resulting in the retention of funds by solicitors – a practice inconsistent with Solicitors Regulations. It was agreed that a small group should convene to review the various types of requests for tax clearance letters and to identify practical solutions."


The process is very clear for sale of assets above 1M EUR where a form Form CG50A has to be filed:
https://www.revenue.ie/en/tax-professionals/tdm/income-tax-capital-gains-tax-corporation-tax/part-42/42-03-01.pdf


While it is a mess for sale of assets with values below 1M EUR. I currently have a request to Revenue (CGT->Non resident) though the My Enquiry. I should receive an answer in the next couple of weeks (if they respect their deadlines). I shall publish the response back here when I get it.


It is not the only mess caused by lack of clear statutory instructions or clear published directives from Revenue. LPT special clearance is another subject where Revenue interprets the law in a very subjective manner since the published directives are too vague (some BS about marketing material of similar properties when the property was bought many years ago). I cannot complain however because at least in Ireland most Revenue employees take practical approaches and within 4-6 weeks they tend to solve matters of personal tax (in latin countries, they are usually the most stupid and unpractical people abusing their power and the only solution are very lengthy appeals). I find councils and the RTB to be much worse.

pasquale83

Hi GGTrek, thank you for the extensive reply.

What I find wired is that the Revenue expects that also income tax return for 2018 should be finalised for getting the clearance on CGT. In principle we have time till end of November to pay taxes on 2018 income but then they won't give me clearance on CGT if I don't have that done. And when the taxpayer is a non resident individual it's a mess also for filing a tax return.

Do you have any additional advice on how to deal with all of this? or just follow what the solicitor says?

I think he mentioned a 30 day period within which the Revenue should reply to the no-audit letter request. If they don't the assumption is that it's OK to release the funds. Is that something that you're aware of?

Thanks again!

GGTrek wrote: »

It is the usual Irish mess due to a mix of incompetence and abuse of power of the Irish government departments (at all levels), a few solicitors only retain the difference between purchase price and sale price, but the vast majority retain all the proceeds of the sale. The whole process has no statutory basis and it is an abuse of Revenue that could be seriously challenged in court if the money is serious enough (problem as usual are the massive legal fees in Irish court and the fact that Revenue using taxpayers' money will take the court case up to the Court of Appeals as they have done very recently with another issue about NPPR).


Look at the last discussion meeting minutes between the Law Society and Revenue:
https://www.revenue.ie/en/tax-professionals/talc/main-talc-minutes/2018/talc-minutes-010518.pdf
"Item 7 – Letters of “no audit”
*Revenue is reviewing the procedure for issuing a letter of “no audit” to solicitors or executors to facilitate the release of funds to beneficiaries (i.e. trusts or inheritances) and in relation to property sales by non-resident vendors. While the procedure appears to be a long-standing practice that is availed of by some solicitors, it does not have a statutory basis. Revenue expects to clarify their position at the next meeting.
* Practitioners noted the importance of the letter of “no audit” procedure to solicitors/executors who risk incurring personal liability for tax due if the funds are released and a tax liability is subsequently identified. Currently, in the absence of a letter of “no audit” funds are being retained for lengthy periods, which is inconsistent with Solicitors Regulations."



More recent one:
https://www.revenue.ie/en/tax-professionals/talc/main-talc-minutes/2018/talc-minutes-190618.pdf
"Item 3 – Letters of “no audit” procedure update
• Revenue has examined the history and prevalence of requests for letters of “no audit”. It appears that requests are made as a matter of routine in some cases, and in a broader range of circumstances than where secondary liability is imposed by the legislation. From Revenue’s perspective, issue of these letters is resource-intensive and arises from long-standing practice without a statutory basis.
• From practitioners’ perspective, the central issue is the availability of letters of “no audit” where secondary liability is imposed on the agent by legislation, i.e. where there is non-resident beneficiary or donor or a non-resident vendor. There are differing views on whether a solicitor can be an agent of their client. Practitioners would welcome the opportunity to
discuss and identify practical ways to address the current impasse, which is resulting in the retention of funds by solicitors – a practice inconsistent with Solicitors Regulations. It was agreed that a small group should convene to review the various types of requests for tax clearance letters and to identify practical solutions."


The process is very clear for sale of assets above 1M EUR where a form Form CG50A has to be filed:
https://www.revenue.ie/en/tax-professionals/tdm/income-tax-capital-gains-tax-corporation-tax/part-42/42-03-01.pdf


While it is a mess for sale of assets with values below 1M EUR. I currently have a request to Revenue (CGT->Non resident) though the My Enquiry. I should receive an answer in the next couple of weeks (if they respect their deadlines). I shall publish the response back here when I get it.


It is not the only mess caused by lack of clear statutory instructions or clear published directives from Revenue. LPT special clearance is another subject where Revenue interprets the law in a very subjective manner since the published directives are too vague (some BS about marketing material of similar properties when the property was bought many years ago). I cannot complain however because at least in Ireland most Revenue employees take practical approaches and within 4-6 weeks they tend to solve matters of personal tax (in latin countries, they are usually the most stupid and unpractical people abusing their power and the only solution are very lengthy appeals). I find councils and the RTB to be much worse.

GGTrek

pasquale83 wrote: »

Hi GGTrek, thank you for the extensive reply.

What I find wired is that the Revenue expects that also income tax return for 2018 should be finalised for getting the clearance on CGT. In principle we have time till end of November to pay taxes on 2018 income but then they won't give me clearance on CGT if I don't have that done. And when the taxpayer is a non resident individual it's a mess also for filing a tax return.

Do you have any additional advice on how to deal with all of this? or just follow what the solicitor says?

I think he mentioned a 30 day period within which the Revenue should reply to the no-audit letter request. If they don't the assumption is that it's OK to release the funds. Is that something that you're aware of?

Thanks again!

Revenue says they will answer any query within 20 working days (more or less 28-30 calendar days) from the date of receipt. Since there are no statutory grounds and no clear directives for this "CGT" no audit letter (they just use CGT excuse to perform a full clearance of all types of taxes), you will just have to go along with whatever Revenue is asking if you want a quick resolution.


Even though you have time until end of 31 Oct 19/15 Nov 19 (if you use ROS) to present Form 11 for 2018 income tax, nothing prohibits you from presenting it now and pay the 2018 income tax balance due by debit card (or slower direct debit):
https://www.revenue.ie/en/self-assessment-and-self-employment/documents/form11.pdf
By now you should have all the expenses and rental income ready for 2018 (I do, the main issues are 2018 utility bills that arrive only in mid February)

What I would have a problem with is the payment of preliminary tax 2019 (almost impossible to estimate so early in the year if you are just selling one of the properties):
https://www.revenue.ie/en/self-assessment-and-self-employment/guide-to-self-assessment/what-is-preliminary-tax.aspx


Are they asking you to pay the preliminary tax of 2019 in March as well? In my opinion this would be quite an abuse from Revenue.


I use Revenue Online Service (ROS) and I find filing returns and paying taxes and asking queries to Revenue through ROS quite efficient. The registration process for ROS was very slow (at least 6 years ago it was) and all through the post (very inefficient), but once you receive the digital certificate everything becomes very efficient.

pasquale83

hi GGTrek, so far they are not requesting me to pay 2019 taxes already but I'd like to do so. I can then hopefully close with Ireland-related business once and for all.

my solicitor is retaining the whole amount as expected. do you think I can request proof of the funds on his client account? I'm a bit nervous to keep the proceeding of the sale on someone else account even of a solicitor.

GGTrek wrote: »

Revenue says they will answer any query within 20 working days (more or less 28-30 calendar days) from the date of receipt. Since there are no statutory grounds and no clear directives for this "CGT" no audit letter (they just use CGT excuse to perform a full clearance of all types of taxes), you will just have to go along with whatever Revenue is asking if you want a quick resolution.


Even though you have time until end of 31 Oct 19/15 Nov 19 (if you use ROS) to present Form 11 for 2018 income tax, nothing prohibits you from presenting it now and pay the 2018 income tax balance due by debit card (or slower direct debit):
https://www.revenue.ie/en/self-assessment-and-self-employment/documents/form11.pdf
By now you should have all the expenses and rental income ready for 2018 (I do, the main issues are 2018 utility bills that arrive only in mid February)

What I would have a problem with is the payment of preliminary tax 2019 (almost impossible to estimate so early in the year if you are just selling one of the properties):
https://www.revenue.ie/en/self-assessment-and-self-employment/guide-to-self-assessment/what-is-preliminary-tax.aspx


Are they asking you to pay the preliminary tax of 2019 in March as well? In my opinion this would be quite an abuse from Revenue.


I use Revenue Online Service (ROS) and I find filing returns and paying taxes and asking queries to Revenue through ROS quite efficient. The registration process for ROS was very slow (at least 6 years ago it was) and all through the post (very inefficient), but once you receive the digital certificate everything becomes very efficient.

GGTrek

pasquale83 wrote: »

hi GGTrek, so far they are not requesting me to pay 2019 taxes already but I'd like to do so. I can then hopefully close with Ireland-related business once and for all.

my solicitor is retaining the whole amount as expected. do you think I can request proof of the funds on his client account? I'm a bit nervous to keep the proceeding of the sale on someone else account even of a solicitor.

I would suggest the following:
1) Ask your solicitor on which statutory basis he/she is retaining the full amount. Legally he/she cannot do it, it is another abuse of the process, at the maximum it should be [sale price - purchase price] which is the amount subject to CGT.
2) Ask your solicitor for a printout of the funds that were received
3) Remind him of the following statute: http://www.irishstatutebook.ie/eli/2014/si/516/made/en/print
"General duty to pay clients moneys into client account
4. (1) Subject to the provisions of Regulations 5 and 6, a solicitor who receives, holds or controls clients moneys shall, without delay, pay such clients moneys into client account."

The whole process is a mess and an abuse from Revenue and from the Law Society and they do know it is an abuse, this is the Irish way to do things by these people until someone takes them to court at high expense!

GGTrek

I finally got the answer from Revenue:
1) It is the solicitor that has to request the CGT Letter of Clearance through ROS my enquiries once the sale of the property has been completed
2) He/she has to send a capital gains calculation to include the date of purchase, purchase price, date of sale, sale price, capital expenses and a possible CGT Exemption under the 2012 and 2017 Finance Acts
3) If the property was let during any time, Revenue will require income tax returns for the periods the property was let out (that is why they requested the 2018 return from you).

I got no answer about timeframes, but I guess if there are no issues they are bound by the 20 working days timeframe of ROS My Enquiries.

I also got no answer about the legality of the solicitor withholding the whole sale proceeds (this will be a question for the lawsociety regulation department which I will soon send out).

pasquale83

Thank you GGTrek.

I'm actually getting CGT and income tax returns done by an accountant. I will then ask the solicitor to follow up with Revenue and send them on the CGT letter of clearance request.

GGTrek wrote: »

I finally got the answer from Revenue:
1) It is the solicitor that has to request the CGT Letter of Clearance through ROS my enquiries once the sale of the property has been completed
2) He/she has to send a capital gains calculation to include the date of purchase, purchase price, date of sale, sale price, capital expenses and a possible CGT Exemption under the 2012 and 2017 Finance Acts
3) If the property was let during any time, Revenue will require income tax returns for the periods the property was let out (that is why they requested the 2018 return from you).

I got no answer about timeframes, but I guess if there are no issues they are bound by the 20 working days timeframe of ROS My Enquiries.

I also got no answer about the legality of the solicitor withholding the whole sale proceeds (this will be a question for the lawsociety regulation department which I will soon send out).

pasquale83

Just an update on this.

After a lot of pressure on the solicitor, I got part of my money back.

I now paid 2018 IT and got clearance (that include 90% of 2019 taxes as an advance payment). 2019 taxes can be filed only next year and with them CGT (that is actually zero for me due to expenses I had).

So I now have few thousand euros blocked on my solicitor's client account waiting for at least Jan 2020 to file 2019 taxes (that include CGT) and get clearance from Revenue. Is that normal? Also, my solicitor is not replying to my e-mails asking to release funds.

So, in summary:

- accountant got his fee
- solicitor got his fee
- Revenue got their taxes
- I am the only one who's paying and getting screwed for having been a non-resident landlord...without forgetting issues that I had with Tenants...

Don't think this is totally legal, but how do I get my rights recognised?

beauf

pasquale83 wrote: »

...
Don't think this is totally legal, but how do I get my rights recognised?

Become a tenant?

pasquale83

beauf wrote: »

Become a tenant?

Problem is I'm the ideal Tenant. So anxious to have no issues with Landlord etc. that I always pay what they ask and don't make any issues (actually as people should do but I think I am the expection...)

Dolbhad

pasquale83 wrote: »

Just an update on this.

After a lot of pressure on the solicitor, I got part of my money back.

I now paid 2018 IT and got clearance (that include 90% of 2019 taxes as an advance payment). 2019 taxes can be filed only next year and with them CGT (that is actually zero for me due to expenses I had).

So I now have few thousand euros blocked on my solicitor's client account waiting for at least Jan 2020 to file 2019 taxes (that include CGT) and get clearance from Revenue. Is that normal? Also, my solicitor is not replying to my e-mails asking to release funds.

So, in summary:

- accountant got his fee
- solicitor got his fee
- Revenue got their taxes
- I am the only one who's paying and getting screwed for having been a non-resident landlord...without forgetting issues that I had with Tenants...

Don't think this is totally legal, but how do I get my rights recognised?

Yes it is. Solicitors have a secondary liability when selling a house for non resident vendor. So if any GCT was due and they have released all sale funds to you and tax is due, solicitors are personally liable for the tax. So no solicitor would take that risk and sell a property for non resident vendor unless they could hold back enough funds to cover the tax. Just another way revenue ensure payment by making them tax collectors in a way.

pasquale83

Dolbhad wrote: »

Yes it is. Solicitors have a secondary liability when selling a house for non resident vendor. So if any GCT was due and they have released all sale funds to you and tax is due, solicitors are personally liable for the tax. So no solicitor would take that risk and sell a property for non resident vendor unless they could hold back enough funds to cover the tax. Just another way revenue ensure payment by making them tax collectors in a way.

Law society allow Revenue this?

As far as I know is in the duties of solicitors to release funds immediately to clients (I don't know the technical terms sorry)

Dolbhad

pasquale83 wrote: »

Law society allow Revenue this?

As far as I know is in the duties of solicitors to release funds immediately to clients (I don't know the technical terms sorry)

Generally yes a solicitor should release funds ASAP but because of the second liability, it means that solicitors can hold back some funds to cover any tax that could be owed. Once a cert of clearance/no audit is issued they will release the funds. Or if tax is owed it can be paid out of that. I think the secondary lability is under the Taxes Consolidation Act 1997. I don’t know if it’s under law that they should hold funds but I don’t see how else it could work. If tax is due and solicitor doesn’t have the funds to pay for it and if the seller wouldn’t pay it, solicitor has to pay the tax. I would assume no solicitor would act for a non resident vendor unless they retain money back to cover any possible tax. It should have of course be explained to you the situation and why they are holding the tax. Law society website have great notes on what solicitors should do.

I don’t know your situation but I would think all funds are held back (after mortgage is paid) until an idea of the tax situation is given from accountant. Then once it’s know the amount of possible tax that could be owed, that’s held back and rest is given to you. However how long revenue takes with clearance is another thing - they aren’t quick on things. So balance will be held until you get clearance for 2019.

OzBobbyFowler

Seen as I'm living in Australian and am currently selling a house in Ireland, this thread has most certainly piqued my interest! From what I've read, the steps I need to carry out look clear.

Just throwing a slight curve ball in here - having moved to Australia over a decade ago, I'm now a Citizen here.

I've been doing tax returns over both countries, my only asset in Ireland being my house.

It's advantageous for me from a tax perspective to make my return in Australia, rather than here.

Can I do that & if so, how would I actually coordinate it? Whatever about dealing with Revenue, bringing the Australian Tax Office into it can't be easy. Has anyone some insight into this?