Affordable Housing Clawback

The_Conductor

Angel2016 wrote: »

No the clawback / contract which I signed for even though I can't remember signing a contract is for 33% of the proceeds of the sale which is 155K less 114K outstanding on the mortgage so its 33% of 41K which is about 13K or just over for the council then obviously feed etc are taken out of the rest.

33% of the proceeds of the sale (@ sale price of 155) is 52k.
Your mortgage does not come into the equation.

Please see the calculation I did for Billyhead on the 09.07.2016 - I did a fully worked example.

Best case scenario for you- if you're insistent on selling now- is to see if the council will absolve you of the mortgage. You do not have any equity in the property.

Best scenario- is not to sell the property- hold onto it- let the clawback dwindle by the 10% per annum between years 10 and 20- and once you have clear and clean ownership of the property after year 20- dispose of it at that stage............

If I were your solicitor- I'd try to do a deal with the council- allowing you to walk away from the property- however- you're not entitled to this- its an absolutely best case scenario- and one which assumes the council are feeling unusually generous towards you..........

The_Conductor

Angel2016 wrote: »

If I sell for 127400 they get nothing but anything over the 127432.00 goes to them.

Plus the council will send their own valuer out and get a current market price for the property. You are obliged to seek this from prospective purchasers- i.e. you cannot simply say- hey guys, I need 127k- its worth 155-160k- but offer me 127k and I'll bite your hand off........

You have to sell for the open market value of the property- period.

The_Conductor

Angel2016 wrote: »

Others pay for my asset its not that simple there are taxes to be paid on rentals like income tax and CGT, property tax and maintenance fees so by the time all of that is paid out you just about break even and have the headache of tenants to go with it.

We're all in that boat- and unfortunately you're not going to find either tenants or landlords who are sympathetic to that argument.

Landlords are treated like milch cows by Revenue- and tenants egg them on. It suits the government to hold up landlords as the big bad bogeymen- because of course it distracts from people blaming politicians for not doing their jobs.......

If you're having a lot of trouble with tenants- perhaps handing it back to the council on one of the long term schemes might suit you- though given the ambiguities associated with the property- perhaps thats not the answer?

I honestly think- if you don't want the trouble of being a landlord- that simply trying to walk away- seeing if the council will absolve you of your debts associated with the property- probably is as good as it gets.

If SDCC are allowing you keep the first 127k of the sale price- they are bending over backwards to help you- this is not how the scheme was structured- they are not obligated to treat you as favourably as this- if they are indeed suggesting they'll give you the first 127k- I'd get it in writing ASAP- as its not an offer you'll ever get again..........

foxatron

People seem to be getting confused about the way the scheme and the claw back work.
Before the crash the scheme made no provision for the fact that the prices would go down. Hence it was taken that the valuation omsp at the time would be the lowest the property would stay. Therefore the clawback allowed the council to recoup any money made from profiteering.
When the prices dropped the council knew that any clawback would in fact make the buyer worse off so they allowed any extra money made over the sellig price but under the omsp at the time be paid to the council in lieu of a clawback.

MrDerp

foxatron wrote: »

The scheme had its benefits as it allowed people to purchase a property at a reduced rate but it was short sighted in the fact that peoples lives change they get married have kids etc and need to get bigger properties. The only real way to make money on the affordable housing is to stay in it for 20 years.

If we weren't all trying to make money on property, affordable or otherwise, then this country wouldn't be in half the mess it's in.

There's nothing short sited about the scheme, it's a joint ownership with the council's claim diminishing over time.

Anyone (including the OP) who availed of the scheme was massively protected from falls in the property values, with the council actually eating the fall in this case up to 33%.

That is massively advantageous to the OP, there are plenty of people who paid market prices for 1 beds who would be delighted to sell them for 60% of their 2008 value and let the council eat the loss, nevermind actually keeping some equity for what they've paid

I would be thankful that the council is letting me rent it out, but in no way should that initial council investment be available for the OP to withdraw as equity to purchase in the private market. The OP has contributed Affordable price - Mortgage balance to the equity, they haven't contributed the council's contribution.

Like a poster above, I'm glad that this scheme was so well designed, and I'm glad that the OP is in a position to exit his/her accidental landlord status if they choose to, due to the council kindly taking a massive hit on their equity to the benefit of the OP.

billyhead

The_Conductor,

I was wondering why would you have to pay Capital gains tax on an affordable house if selling it before the clawback expires?

Turkish1

billyhead wrote: »

The_Conductor,

I was wondering why would you have to pay Capital gains tax on an affordable house if selling it before the clawback expires?

There is no CGT on your PPR so it should not apply to affordable housing as I believe the scheme was for the purpose of providing people with a primary residence.

It also wouldn't apply in the OP's case either as she would not be making a gain - based on the assumption that the excess (over purchase price + costs) goes back to the council.

The_Conductor

Turkish1 wrote: »

There is no CGT on your PPR so it should not apply to affordable housing as I believe the scheme was for the purpose of providing people with a primary residence.

It also wouldn't apply in the OP's case either as she would not be making a gain - based on the assumption that the excess (over purchase price + costs) goes back to the council.

Its not the OP's PPR though- as per her previous post- she has had it let out........ So- the benefit of no CGT being due on the sale- doesn't apply- its not her PPR- despite it being the sole property she owns. If she wants to reacquire a CGT exemption- she is going to have to live in the property for a period of at least 3 years from the date it was last let.

The OP is also (or at least was also- earlier in the thread) of the assumption that they were indeed making a gain (I think this notion has been firmly hit on the head- after her phone call with SDCC this afternoon).

Turkish1

The_Conductor wrote: »

Its not the OP's PPR though- as per her previous post- she has had it let out........ So- the benefit of no CGT being due on the sale- doesn't apply- its not her PPR- despite it being the sole property she owns. If she wants to reacquire a CGT exemption- she is going to have to live in the property for a period of at least 3 years from the date it was last let.

The OP is also (or at least was also- earlier in the thread) of the assumption that they were indeed making a gain (I think this notion has been firmly hit on the head- after her phone call with SDCC this afternoon).

I'm not sure I understand your point. You appear to be just reiterating exactly what I said.

In short - No CGT will apply as not making a gain for the OP
In general (ie in the vast majority of cases) for affordable housing there should not be CGT as they were for given for principal residence purposes

On a general CGT related point - i havent checked in a while but I don't think if she moved back in for 3 years that they would have a full CGT exemption. The exemption would be pro rated based on period of ownership and what % of that time it was a PPR (with some exceptions like the last 12 months prior to sale included, had to move for work etc..)

Angel2016

On the CGT my neighbor who sold her apt two months ago and also works for the council said to me to look into CGT with the revenue, I already know I have to pay the NPPR I have registered to do that, LPT is all paid up and all other taxes.

We have decided to sell the apartment and after fees ie, EA, Legal Fees, Maintenance fees being paid off etc we will come away with around 7K and all the furniture is going to be sold for cash so that will be banked and we are just going to have to keep adding to it, the deposits needed for a house in this country for someone in my position is around 50K which is a really huge amount to try and save up when you are paying high rents and bills.
We are debt free dont have any car loans or personal loans just a visa card with a few quid on it so we have made a new plan to get to where we want to get to.

I would just like to say that I posted this thread looking for some clarification of something I was unsure of and wanted people to give any information they have but in doing so the amount of people that have come on here and been very negative and down right rude in fact is unreal the one person who was polite and did shed light on the situation was Heffoman who was in the same position as me, everyone came on here giving their two cent as to how I was trying to make money from the apartment and more or less said I was trying to pull a fast one where in fact I was not !
I work full time, pay all my taxes, pay all my bills have a great credit history and all I want to do is buy a house and finally get where I want to be in life, I rent a kip of a house for 1250 with a shockingly bad landlord who treats us like dirt wont fix anything so there is no security in that and I want security that is all nothing more.

I was unsure as to where I stood on the AH clawback and I was under the impression it was a percentage of the profits and not the whole sale price hence why I posted this thread.
People in Ireland have a tendency to be jealous of other people and their situations if they think they are doing better than them and that has shown itself in full on this thread.
I wasn't going to post this feedback on people but I was reading some of the posts last night and said I would, you should not all judge someone else when you don't even know them or their situations and frankly I am disappointed at the attitude of some of the posts / comments on here some people were helpful and some simply weren't it makes you think twice as to posting on here again and also about what type of people we have here in Ireland !
To you all good luck and good bye !

athtrasna

Mod note

OP A lot of people took time to respond to you in an attempt to answer your question. You might not agree with or appreciate all the responses but that post was uncalled for.

Thread closed