Selling house and working numbers on refurb or sell as-is

[happycamper]

Hi,

My tenant vacated last month after almost 15yrs in situ and am in the process of selling. Local estate agent has valued it at 200k as-is but may not sell quickly.
Another option is to bite the bullet and invest 20 odd grand and smarten it up and hope to get to 250k.

The 250k sounds lovely but before I commit I don't know if I fully understand the CGT liabilities. I bought in 1999 and it was my PPR till 2004, after which it has been rented since.

Am I correct in thinking that sale price for CGT purposes is the price I sell at, less refurb costs, less advertising costs, less solicitor fees & less estate agent fees?

So in this example, I sell for 250k less 20k, less 1k, less 2.5k & less 2.5k = 224k

I bought in 1999 at 140k Euro so gain is 84k @ 33% = 27.7k CGT??

Anything I'm missing, biggie for me is can I claim refurb costs to reduce my CGT commitment?

Cheers,
HC

 

[Setforlife]

you can deduct refurb costs, but only what you pay someone to do it. You can also take out the years it was PPR from the CGT calculation and the final year

 

[DannyBoyD]

Clean & clear; wash the windows, cut the grass, fix anything obvious (loose door handles etc)

Otherwise sell as is.

 

[misemoi]

Indexation applies as you purchased in 1999. Not sure how much of an impact that has but add it to your calculation.

https://www.revenue.ie/en/gains-gifts-and-inheritance/documents/cgtmult.pdf

Agree that you should do the bare minimum of work. Find another angle to sell, ie ability to extend, close to transport, who is your target market and have targeted advertising to that market. If it won't sell quickly at 200k, what price will it sell quickly at? Do you have a mortgage on it or can you wait it out to get a target price?

 

[jpd]

What is included in your refurb costs - in general painting, decorating, etc are not allowable when calculating capital gain

I cannot see how spending € 20,000 on refurb, whatever that means, is going to increase the sale price from € 200,000 to € 250,000 - at best it will increase to € 220,000 and even then that's doubtful

 

[jpd]

Sale price	200,000​
Less allowable expenses
Purchase cost including solicitor's fees, indexed up by 1.193	167,020​
Sale fees -solicitor, advertising, estate agent	6,000​
Total chargeable gain	26,980​
Less PPR relief 1999-2010 (11+1) years out of 26 = 46%	12,411​
Taxabale gain	14,569​
Less personal relief	1,270​
Taxable	13,299​
Tax @ 33%	4,389​

 

[Brendan Burgess]

Presuming ongoing maintenance costs can be deducted from the rental income when calculating rental profits?

So if the OP was planning to rent the property again, he could set the maintenance costs against the rental income.

But if he is not planning to, does that mean he can't claim them?

Seems odd to me.

Brendan

 

[Sarenco]

I cannot see how spending € 20,000 on refurb, whatever that means, is going to increase the sale price from € 200,000 to € 250,000 - at best it will increase to € 220,000 and even then that's doubtful

To be fair, there is usually a small premium for properties that are in “turn key” condition.

But I agree that it seems overly optimistic to expect a €20k refurb to increase the sales price by €50k - an uplift of €25-30k might be more realistic.

 

[Dr Strangelove]

I cannot see how spending € 20,000 on refurb, whatever that means, is going to increase the sale price from € 200,000 to € 250,000

100%

All this tells me is that the OP needs a better estate agent.

 

[aristotle]

Just paint inside, all rooms a neutral colour.

Clear out all furniture and leave it clean and simple.

 

[ClubMan]

100%

All this tells me is that the OP needs a better estate agent.

Why? There's nothing above to say that it was the EA who suggested that a €20K refurb might raise the selling price from €200K to €250K.

 

[happycamper]

Thanks all, that clarifies a lot. The house is really rough from being rented for 15years... I guess that was why I was considering the 'investment' but have scaled that back and will tidy/repair/clean and get it listed...

Thanks again.

 

[lff12]

What is included in your refurb costs - in general painting, decorating, etc are not allowable when calculating capital gain

I cannot see how spending € 20,000 on refurb, whatever that means, is going to increase the sale price from € 200,000 to € 250,000 - at best it will increase to € 220,000 and even then that's doubtful

I presume he/she means new kitchen, new bathroom, replacement boilers etc? Not just repainting or doing maintenance jobs that are normally considered routine maintenance.
If its any way useful, I looked at quite a few similar properties in one development before I bought in 2022, and there was both poorly maintained properties where the bathrooms & kitchens were heavily worn, and others where both had been replaced. The latter sold within a few months for 250k while the badly maintained places took over a year to sell and got 225k. So I'd say that the better place probably got their money back on the refurbishment costs, but the real benefit to them was that it sold far more quickly.
I did also look at one place that was in good nick but had the most horrendous, gaudy and tasteless colour schemes I've ever seen, AND were selling fully furnished, albeit with tacky and mismatched furniture - it made market price but took a lot longer than neighbouring properties to sell.