Jill Kerby

Revenue unsure of my first time buyers status

MR writes from Co Meath: I have applied for the new 30% mortgage interest allowance and was told I do not qualify. I purchased a house in 2005 and was exempt from stamp duty and received first time buyer (FTB) allowance on my mortgage. I was newly divorced and was treated as a FTB applicant. However, on applying for the extra allowance today I was told am not suitable as I claimed FTB allowance on a house I had bought in 1983 when I was single. I sold this house in 1984. I thought this new legislation on the extra allowance was for property bought between 2004-2008. How can the Revenue treat me as a FTB in relation to stamp duty and not a FTB when I need to claim the extra allowance?

MR writes from Co Meath: I have applied for the new 30% mortgage interest allowance and was told I do not qualify. I purchased a house in 2005 and was exempt from stamp duty and received first time buyer (FTB) allowance on my mortgage. I was newly divorced and was treated as a FTB buyer. However, on applying for the extra allowance today I was told am not suitable as I claimed FTB allowance on a house I had bought in 1983 when I was single. I sold this house in 1984. I thought this new legislation on the extra allowance was for property bought between 2004-2008. How can the Revenue treat me as a FTB in relation to stamp duty and not a FTB when I need to claim the extra allowance?

The fact that you purchased your current home after your divorce in 2005 is a clue to why you were considered a first time buyer then, despite having bought your first house in 1983 and then, presumably, being a second-time joint owner with your spouse of your marital home.

Under a Revenue rule introduced in June 2000 (see http://www.revenue.ie/en/personal/circumstances/separation-divorce.html#section14), the spouse who leaves the family home and gives up their interest in it as part of their separation or divorce settlement (with the other spouse continuing to occupy the property) can be treated “as if a first time buyer” for stamp duty purposes if they buy another home. However, there is no specific reference in the rule as to how you are treated regarding mortgage interest relief.

Nevertheless the Revenue allowed you to be considered “as if” you were a first time buyer again for mortgage interest purposes as well as for stamp duty purposes. If that decision was correct, then I can’t understand why your claim for the extended first time buyer relief that was introduced in the 2012 budget for all FTBs of property between 2004 and 2008 was rejected.

I spoke to an official in the Revenue’s TRS section who confirmed that the decision to give you FTB status for stamp duty purposes is related to your status as a newly divorced person who was replacing a family home to which she no longer had any interest. He was unsure, however how you were deemed to be an FTB for mortgage interest purposes in 2005 except to suggest that it may have been related to whether you used up all your allowances as a genuine FTB in 1983 and were being permitted to carry them to this new property.

He suggested that you contact the TRS section directly at LoCall 1890 463 626 or your Inspector of Taxes for a definitive answer. 

Depending on the size of your mortgage, a decision in your favour could be worth several thousand euro to you between now and 2017 when all mortgage interest claims will end.

Transfer window

KP writes from Co Louth: In January when it appeared that Greece might bring down the euro, I transferred some of my savings to Northern Ireland. As time was short (or so I thought) I transferred the €50,000 into my parent’s bank account. I have recently got my name added to this account. 

What are my tax liabilities? Do I have to pay tax in UK or Ireland?  My parents pay tax in the UK where they own businesses. Would I be better buying an asset in the UK with the money before I have to pay any DIRT?

You need to check to see what tax, if any, is payable on the interest you and your parents are receiving from this account. Offshore bank account holders are often exempt from paying deposit tax, but if you are not, then you may be able to claim a tax credit from the Irish Revenue for any tax you do pay on your offshore account. Irish DIRT of 30% is a liability and must declare this account on a tax return to the Revenue and pay the DIRT the October 31stself assessment tax deadline (or mid-November if you pay online).

It’s entirely up to you to leave your money in this NI account, to bring it back home if you are no longer worried about leaving it here or to invest it. You are still obliged to pay DIRT in the UK and/or here on any interest you earn. If you do decide to invest some or all of this money just make sure you inform yourself about the investment options that suit your needs and expectations and you are absolutely clear about the amount of risk you are prepared to take to achieve a yield that beats a deposit rate. 

Policy decisions

NK writes from Dublin: I have two personal loans, a car purchase plan and two credit cards. I have never missed a payment on my loans or car purchase plan so I'm in good standing with my bank. However, I have PPI protection on all of the above and I would like to know if I was miss-sold these products.

I have looked for advisors on line but for whatever reason, I'm suspicious of them or they want an up-front payment to take on a case.

Payment protection insurance has been grossly missold in the UK over the years with the UK Financial Services Authority (FSA) ordering banks to refund over a billion pounds worth of premiums and compensation last year alone. Recently, our regulator, the Central Bank completed an initial review of the PPI sales practices of the seven main Irish lenders and it will finish its investigation by the summer.

If you think you’ve been missold these five policies you should make your case to the Financial Ombudsman (see www.ombudsman.ie) and seek compensation that way.  Make sure to explain your personal circumstances and list all the policies, how much they have cost and their duration. Include any evidence that you were pressured into buying the insurance on the grounds that you would otherwise be denied the loan.

There are private, unregulated (by the Central Bank) companies offering to negotiate on the policyholder’s behalf with lenders to seek refunds or compensation for the misselling of these payment protection policies. They charge upfront initial fees and/or a ‘no win no fee’ charge that can amount to 10% of the refund or more.

This is clearly a profitable business for the intermediary, but now that the Central Bank is investigating whether widespread misselling has happened here, why not wait for the outcome, in addition to making a formal complaint to the Ombudsman?

The main grounds on which misselling may have occurred is if it was sold to people who were unemployed, self-employed, working less than 16 hours a week or on contract. People who were told PPI was compulsory are also likely to be candidates for a refund or compensation.

Meanwhile, there’s nothing stopping you from cancelling this insurance, says the National Consumer Authority and if you paid the premiums up-front, you can claim a refund of the remaining term.