Why are prices not falling in some areas? / Are there tax implications if our house has potential? /

Why are prices not falling in some areas?

QEveryone knows that property prices are falling but why are some pockets of the country apparently and frustratingly immune?

We are looking for a holiday home and I have been tracking, on the internet, a particular house in rural Galway for the last year and not a single drop in the price.

ANo part of the country, or sector of the market, is immune from price drops when it comes to property. One great benefit of property websites is that it's easy to keep an eye from a long distance on a particular property but they can't tell the full story. Nothing beats direct contact with the auctioneer who should give you the run down on the situation - he can't be too thrilled to have this house hanging around either.

There are many reasons why a price sticks and they all have to do with the seller. It could be that this is an executor's sale in which case the family could have decided on a price collectively and one person refuses to lower it. Or it could be a long-owned holiday home and the sellers are in no rush because they have no mortgage and simply can hold out for longer in the hope of getting the price they want. Or it's a marriage break up and the sale has gotten messy due to a lack of agreement between the couple. Or there could be a title issue holding up the sale - there could be an offer on the table, accepted by the vendor but held up due to legal issues. You could speculate forever on why this house price has not fallen but it's not to do with the general market. It's not clear if you have actually visited this house, or if you are doing what a lot of us do, window shop on the web and daydream. If you are serious, go look at the house and have a talk with the auctioneer.

Are there tax implications if our house has potential?

QOur house which we intend putting on the market in September has, we (and our agent) believe, development value - a very large site with potential for two houses. That's how we will be pitching it so we obviously will be getting more for it than we might if it was just a house. Our agent has suggested that there may be tax implications for us, though this is our family home and our main residence, and I was under the impression that no tax was due on such sales.

AWhere your property has development value - if it is sold for a price higher than its normal current use value - then the relief from Capital Gains Tax is confined to what it would be if the property did not have development value. It's likely you will have to pay CGT on the balance. As CGT can be complicated, seek professional tax advice and have your figures clear so you will be in a better position to assess any potential offers.

Your questions

Send your queries to Property questions, The Irish Times, 24-28 Tara Street, Dublin 2 or email propertyquestions@irish-times.ie. The above is a representative sample of queries received. This column is a readers' service and is not intended to replace professional advice. No individual correspondence will be entered into.