Dominic Coyle answers your financial queries
Capital gains tax on home/B&B
We own a bed and breakfast which we have been operating for some years. We are now looking to sell the property, which is also our home. Where do we stand on the issue of capital gains tax?
Ms M.M., Waterford
As you know, when it comes to selling your own home, there is an exemption on the issue of capital gains tax. However, this is complicated, as you might expect, when the family home is also the family business. From the point of view of the Revenue, it all comes down to proportionality.
Essentially, you have to divide any gain you make on the sale of the property between the parts that are used by the family and the parts that are used "exclusively for the purposes of a trade or profession".
The key word here, of course, is "exclusively". If there are parts of the house that are used both by the business and the family, they are considered part of the principal private residence when it comes to apportioning the capital gain. In the case of a bed and breakfast operation, shared facilities would include the kitchen and possibly the sitting room. However bedrooms used for the business together with associated bathrooms and a dedicated dining facility, if it exists, would be liable to capital gains tax.
I would guess you would need to get an accountant involved, as it is not simply the physical building. The sale price of the property will presumably include a certain value on the gardens and other features so you will need to get a careful determination of the proportion of the capital gain that is attributable to those parts of the house used "exclusively" for the business.
You indicate in your letter that you reckon approximately 30 per cent of the property is used for the business. On that basis, 30 per cent of the capital gain allowing for indexation and expenses involved in the transaction would be subject to capital gains tax.
Share dilemmas
My parents own shares in Jurys Doyle group. The shares are held in joint names.With the shares in the news and rising in value all the time, my father was looking to sell. However, my mother died very recently and we do not yet have even a death certificate. Is it possible to sell these shares now?
Ms J.S., Cork
As you say, Jurys Doyle has been very much in the news this summer, what with the company looking to release some of the value of its valuable city centre sites around Dublin and various groups circling to see if they can organise a takeover.
The result is that the share has climbed more than 50 per cent so far this year and is now trading around the €18.70 mark - historical highs for the company.
The timing, of course, is more than a little unfortunate for your father in the light of his recent bereavement.
I'm not sure he is going to be able to do a lot in the absence of a death certificate. Both Merrion Stockbrokers and Davy tell me that the first thing you would need to do would be to notify the registrar of the death. However, the registrar would not simply be able to take that information by word of mouth. What they would need would be either an original death certificate or certification from a lawyer.
The second issue, naturally, is what your mother's intentions were for the shares. Assuming that she was bequeathing these to her husband, you would need a grant of probate or, in its absence, formal certification from her solicitor stating that your father was to become the beneficial owner of the shares.
If, however, the portion of the shares owned by your mother was going elsewhere, it would be more complicated because that person would naturally have a say in any decision on their sale.
Either way you look at it, I cannot see how your father can sell these shares - at least in the absence of a death certificate, something I understand takes at least a couple of weeks to organise. The good news is that there seems little likelihood of the Jurys story going away or the share price collapsing in the interim. The company's dominant directors - the Doyle and Beatty families, which together control more than 40 per cent of the shares - have indicated their intention to bid not less than €18.90 a share for the company.
Now, an indicative bid is worth little - there is no obligation on the bidder to follow through. However, the clear indication in this case is that either the Doyle/Beatty axis will formally bid for the company or one of the circling pack of developers will do so.
My wife and I purchased the maximum allotment of Eircom shares at the time of the flotation. These shares were purchased separately in each of our names. At the same time, we also purchased shares in another company in joint names. These shares are showing a very healthy profit. We intend to sell both holdings. Can we offset the full loss on Eircom shares in sole names against the profit made in joint names.
Mr J.R., Sligo
The first issue is that any shares you owned in the original Eircom flotation - I assume it must be that one as the more recent flotation involved no allotment and the shares are, in any case, trading at a profit - should have been surrendered to the company long since.
They were compulsorily purchased by the company when the O'Reilly-led consortium took it private - although you were left with some Vodafone shares that are still trading at a significant loss.
On the more substantive issue, you can offset losses against gains regardless of the names in which the shares are held. A loss or gain in a sole name applies wholly to that person whereas a loss or gain in joint names is split evenly between those names. So, each of you can offset your Eircom loss against half the gain on shares purchased in joint names.
Please send your queries to Dominic Coyle, Q&A, The Irish Times, D'Olier Street, Dublin 2 or e-mail to dcoyle@irish-times.ie. This column is a reader service and is not intended to replace professional advice. Due to the volume of mail, there may be a delay in answering queries. All suitable queries will be answered through the columns of the newspaper. No personal correspondence will be entered into.
