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taxation on compensation for remedial work on house

  • 07-08-2020 7:18pm
    #1
    Hannaho
    Registered Users Posts: 722 ✭✭✭


    Just wondering do you have to pay CGT/tax on compensation for remedial works on house - caused by incompetent builder and engineer during renovation. The remedial works cost just over 80k - 80k as the final figure that the insurance company for the engineer would offer, without lodging money into Court. The money didn't cover the devaluation in our house due to reputation etc. The house is a PPR. I am asking this as I am in the middle of doing my tax returns for 2019.


Comments

  • #2
    Calahonda52
    Registered Users Posts: 12,188 ✭✭✭✭Calahonda52


    How did you arrive at a devaluation on the basis of reputation?
    No tax due

    “I can’t pay my staff or mortgage with instagram likes”.



  • #3
    Hannaho
    Registered Users Posts: 722 ✭✭✭Hannaho


    Basically that people would want a reduction in price of the house if I was going to sell, as they would have know that extensive remedial work was done on the house, and that the engineer who oversaw the project made out he was a chartered engineer but wasn't etc - the remedial work necessary on the house was 75k.


  • #4
    marizpan
    Registered Users Posts: 443 ✭✭marizpan


    CGT is based on an actual disposal, have you sold the house? If not then this query is irrelevant.


  • #5
    Calahonda52
    Registered Users Posts: 12,188 ✭✭✭✭Calahonda52


    Hannaho wrote: »
    Basically that people would want a reduction in price of the house if I was going to sell, as they would have know that extensive remedial work was done on the house, and that the engineer who oversaw the project made out he was a chartered engineer but wasn't etc - the remedial work necessary on the house was 75k.

    Have you brought this matter to the appropriate body?

    “I can’t pay my staff or mortgage with instagram likes”.



  • #6
    Marcusm
    Registered Users Posts: 10,183 ✭✭✭✭Marcusm


    marizpan wrote: »
    CGT is based on an actual disposal, have you sold the house? If not then this query is irrelevant.

    You might want to reread your CGT texts or the Act itself - hint: capital sums derived from an asset. Zim Properties would also be a useful search.


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  • #7
    Marcusm
    Registered Users Posts: 10,183 ✭✭✭✭Marcusm


    Hannaho wrote: »
    Just wondering do you have to pay CGT/tax on compensation for remedial works on house - caused by incompetent builder and engineer during renovation. The remedial works cost just over 80k - 80k as the final figure that the insurance company for the engineer would offer, without lodging money into Court. The money didn't cover the devaluation in our house due to reputation etc. The house is a PPR. I am asking this as I am in the middle of doing my tax returns for 2019.

    You might want to take advice based on the terms of the actual settlement. Capital sums such as compensation proceeds are treated as if they were a part disposal of the asset but this can be modified where they are invested in repairing the asset or acquiring a new replacement asset. A payment in settlement for surrendering a right to sue may not always be treated as favourably but this is dependent on the facts (the right to sue being a chose in action which is a different asset from the house itself).


  • #8
    marizpan
    Registered Users Posts: 443 ✭✭marizpan


    Marcusm wrote: »
    You might want to reread your CGT texts or the Act itself - hint: capital sums derived from an asset. Zim Properties would also be a useful search.

    Thanks Marcusm,
    My understanding was that as it is PPR then it doesn’t apply? Does PPR impact it?


  • #9
    Marcusm
    Registered Users Posts: 10,183 ✭✭✭✭Marcusm


    marizpan wrote: »
    Thanks Marcusm,
    My understanding was that as it is PPR then it doesn’t apply? Does PPR impact it?

    If it resulted in a gain from a part disposal of a PPR then it would (effectively) not be taxable. If it was regarded as a gain arising from a disposal of a right to sue then it would be . Hence the suggestion that Hannaho get some actual advice.


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