Agreeing on expenses of co-owned house Sale

ivorystraws

Hi,

I jointly co-own a house with a family member (lets call him Tony) and have done so since the early naughties. I rarely ever lived there and only stayed on occasion. Eventually, I rented my room out in the house (with Tony's consent). That ended last year when the tenant moved out in November. Now we're selling and the house has gone sale agreed and we're at the stage where we have agreed a date for the signing of contracts etc.

However, there's a problem agreeing on expenses related to the house. I originally wanted to discuss it with Tony so that we could settle it between us. Tony (i.e. Tony's finacee) didn't agree so now everything is going through the solicitor. Tony is claiming that I owe the following:

• Payment of LPT (dating back to 2013) 
• Property Management Charge (dating back to early naughties)
• Payment for exterior painting of the house (i.e. €700 in 2015 and €950 in 2020) 

I've no problem paying 50% the above but I do have some questions:

1. I know that Tony was/is putting some of the expenses related to the house through the farm accounts. If that's the case, isn't their revenue implications (assuming some/all of the above are allowable revenue expenses)? Do people agree that I should pay 50% of a business expense now that the house is being sold?
2. The other cause for concern relates to the instructions provided to our solicitor by Tony (via his Fiancee), which stated "I need the breakdown of all proceeds from the house sale outlined on the final account letter as per my accountant and solicitor in the UK as the funds are being transferred there together with a transaction my fiancee is completing with her solicitor. The breakdown is required for traceability to comply with the uk aml and cdd requirements."

Does this sound dodgy to anyone else? I know there's not much I can help with here but it just seems like a very strange request and I'd like to get people's thoughts on it.

I appreciate any feedback/advice/recommendations on the above?

Thanks in advance.

relevanc

Are you looking to fall out with ‘Tony’?

All very fair expenses to request that you pay and surprising that you haven’t paid/offered to pay your share at yet.

LPT and property MC can never be claimed through farm accounts.

The AML UK is a requirement if the funds are being transferred to a UK bank account - standard above board anti-money laundering and tax clearance measure.

Tony sounds very easy going and possibly the fiancé is protecting his interest and rightly so

Bass Reeves

Was Tony and fiance living there for the last few years and were you not living there.

It was an agreement between you and Tony.

Are you both using the one solicitor. By the sound of it I would advise you to get your own one

handlemaster

Pay what you owe. As above surprised he let you away with this thus far.

Deeec

Pay your share of expenses. Tony is correct in asking for your half. The only expense of the 3 listed that possibly could be put through as a farm expense is the painting. It's not worth causing an argument over though.

Breakdown of all costs - again this is a valid request and I can't see why you have an issue with this. If it's the fact Tony's share is going to the UK ( and the fiance may be doing something dodgy) that's Tony's problem to deal with.

Jim_Hodge

You've nothing to do or worry about here. Tony is spot in. Pay your share. All seems above board.

Bass Reeves

https://www.boards.ie/discussion/comment/119789971#Comment_119789971

I would Iike to know was Tony and he fiancé living there for the last number of years

ivorystraws

https://www.boards.ie/discussion/comment/119789336#Comment_119789336

No, I'm definitely not looking to fall out with anyone. Those expenses all seem fair, my question was whether there would be an issue if they had been submitted through the farm accounts, as other expenses have e.g. home insurance.

Tony doesn't have an account in the UK, his fiancé does.

ivorystraws

https://www.boards.ie/discussion/comment/119789798#Comment_119789798

Yes, it's an agreement between me and Tony, nobody else involved. Tony and his fiancee never lived there.

We are both using the same solicitor for the sale of the house but is it really worth getting another solicitor?

ivorystraws

https://www.boards.ie/discussion/comment/119789934#Comment_119789934

Thanks for the feedback. If other expenses from the house are put through the accounts, then why can't all 3 expenses listed be put through as a farm expense?

I don't have any problem with a breakdown of all costs - you're correct in that my worry is that Tony's share is going to the UK ( and the fiancee may be doing something dodgy). Tony has never lied or worked in the UK so I'm not sure why it's not going directly into his own Irish account. Anyway, you're also right that it's his problem once that transfer is complete.

ivorystraws

https://www.boards.ie/discussion/comment/119790042#Comment_119790042

No, they've never lived there as far as I'm aware.

Bass Reeves

https://www.boards.ie/discussion/comment/119790159#Comment_119790159

I am trying to get my head around this you bought a house with Tony, you had a room( I presume lived there) but Tony did not. You then rented you room.

However since you bought it Tony has being paying the property management charges and LPT on the property. The property has been painted twice. Was it rented as well during this time. Was Tony renting his room all this time.

If Tony was renting his room and was not tax compliant, you may not be either if you did not declare the rental income from your room.

The moving of the sale price directly abroad may be to avoid Irish tax as Tony was not resident there you were for some time. The problem is of Tony had a room rented and received rental income for it technically you may be responsible for that as well.

That solicitor seems to be protecting Tony interests not necessarily yours.

Bass Reeves

https://www.boards.ie/discussion/comment/119790180#Comment_119790180

The only way the management fees and painting could be put through accounts is if there was rental income involved. Painting cannot be put through farm accounts unless the receipt says painting a farm shed. Property management charges definately cannot be put through and LPT is not allowable as an expense against rental income

3DataModem

1. Ensure you have your own solicitor, that you are paying, acting in your interest.
2. Don't take instructions outside of Tony -> Solicitor -> Solicitor -> You. Tell your solicitor to only respond to Tony's solicitor, not Tony. Tell yourself not to reply to Tony OR Tony's solicitor, only via your Solicitor.
3. Anything that you are expected to reimburse, ensure you see an invoice or receipt for, and reimburse the person / entity who paid the invoice, and ensure you get a receipt for your reimbursement. Tony paying an expense through a business and getting reimbursed for it from personally is a tax dodge, plain and simple. You could have some liability in the future here (as it might seem that you are facilitating the dodge).
4. The AML / CDD stuff seems OK. The bank the money is going to will need to see the source of funds.

relevanc

Transferring the funds to the UK would not get around the Irish tax due regardless of Tony’s tax resident status.

The disposal of an Irish asset is within the scope of Irish tax and should the UK try to tax it also, the paper trail is required to prove the Irish tax treatment.

IMHO don’t be looking for an argument with family if at all possible. Fighting over small expenses which you seem to feel have been claimed as farm expenses is only looking for hassle and stress.

Pay your dues and don’t worry about Tony’s business however ill advised it may seem from the outside. Life is too short for conflict

ivorystraws

https://www.boards.ie/discussion/comment/119790220#Comment_119790220

Thanks for clarifying, that's definitely a helpful reference. As long as none of these three house expenses have been included in the farm accounts, I feel more reassured that there won't be any issues.

ivorystraws

https://www.boards.ie/discussion/comment/119790238#Comment_119790238

Wow, thanks for your detailed response and advice. Being honest, it's made me a bit nervy but I'm 75% sure that there's nothing dodgy goin on with Tony. It's the people that Tony have surrounded himself with that I'm not sure of.

Do you really think I need to have my own solicitor? I'm trying to understand the potential risks here.... is it CRO/Revenue liability or some other legal liability?

I haven't yet confirmed that Tony is paying an expense through a business and getting reimbursed for it but I could ask for that to be confirmed in writing or ask for a letter from his accountant to state that.

I can ask for a receipt for anything I am expected to reimburse.

ivorystraws

https://www.boards.ie/discussion/comment/119790259#Comment_119790259

They are all valid points and as I mentioned, I'm definitely not looking for an argument. I originally wanted all of this to be sorted out between us without having to go through the solicitor but Tony wanted to go the formal route as he needs the aforementioned statements on legal letterhead.

Just to clarify that there's been expenses on both sides i.e. I've been paying for Mortgage protection for the past 6 years in addition to painting, new fixtures (floor, lights etc), fittings (taps, shelves etc) to prep the house for sale.

The problem isn't simply paying the expenses, it's confirmation of what's been put through Tony's business account.

relevanc

OP you are not responsible for a third party’s tax affairs!

This area is my profession, and whatever Tony is or isn’t doing with farm accounts does not involve you nor could you be held liable. You are only liable for your share of the gain on disposal of the house

Best to just let Tony do as he wants and ensure the house sale ends the issue.

Mrs OBumble

Whether he's putting expenses thru farm accounts or not is none of your business. All that matters is that he pays his half and the source of the funds is legal.

Have you looked for him to pay half the mortgage protection insurance and other expenses you had? You should, assuming you both got half the rental income?

And YES of course you need your own solicitor. Thinking otherwise is extremely naive.

ThreeGreens

The property management charge and painting would be valid tax deductions against your rental income (assuming it was rented during the relevant period).

As others have said what Tony did or did not do with his business is none of your concern.

Likewise what Tony does with his share of the sales proceeds are none of your concern.

If you owe half the expenses, then pay them. There is no excuse not to, unless you reached a different agreement at the time.

Dav010

You retained a room for personal use in, until you received an income from renting a room in the property you co-own, possibly will share in a profit on its sale, but you are questioning the fairness of paying half of the legally required LPT and MC charge which applies to the property owner?

Am I missing something?

ivorystraws

https://www.boards.ie/discussion/comment/119790441#Comment_119790441

Thank you. This piece of advice best sums up the recommended approach (by most people on this thread, the auctioneer and solicitor). The solicitor effectively confirmed the same i.e. Each of us is only liable for our respective share of the gain on disposal of the house.

The house expenses (on both sides) have been agreed and confirmed with the solicitor. The contracts have been signed and the buyer can move in once the solicitor finalises everything.

Thanks for all the helpful responses!