Jill Kerby

Bank on Australian gold but pay the tax

MP writes from Kildare: I heard you on radio last year regarding personal savings. Part of your advice said that you had put a portion of your savings in gold. From memory you said you used an Australian company.  Would you please provide the contact details of this firm? Are there any issues relating to taxation if capital gains are made? How can payment be made? * Euro Bank credit transfer, credit card, cheque?

The Perth Mint, the gold depository for the Bank of Western Australia (www.perthmint.com.au/investment_certificate.aspx) sells allocated and unallocated gold and silver certificates to investors. Their European agent is the Dublin/London gold bullion dealers Goldcore and payments are made, if I recall, when my husband and I bought our certificates in 2006, by electronic bank transfer.  Under the Perth Mint certificate programme, the precious metals, mined in Australia, are kept at the Mint in your name (as allocated metal) or in a pooled fund to which you belong if unallocated. Certificates are a cost effective way of owning and storing gold and silver, rather than buying physical gold which includes a premium per ounce, delivery and insurance costs.

The sale of any asset attracts a capital gain tax of 25% in this country, and you are obliged to file a tax return and pay your tax on any gain by 15 December each year if the disposal takes place between 1 January 1 and 30 November and by January 15 if the disposal occurs in December.  

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Flat solution

AR writes from Dublin:  I have a two bed apartment in Dublin which I bought for €275,000 in 2004 with a €30,000 downpayment.  It has been valued at no more than €200,000, but my sister, who has been living with me says she is willing to take over my mortgage balance, which is now about €235,000.  She will have a tenant to help make her repayments.  The problem is that my lender has just informed us that they will not (cannot?) lend for an apartment, even though they said they would in November. I/we have never missed a mortgage payment, my sister has a good job, some savings which she could use as a downpayment on her own mortgage and she has a good tenant lined up who also has a good job.  Can you recommend a bank that will lend to her?  I have a new job in the UK lined up and am getting a little desperate.

Banks are increasingly reluctant to lend for apartment purchases because of the huge overhang of unsold properties around the country and the fact that so many are in negative equity – yours included.  With prices still falling – about 15% lower on average in 2010 according to the latest Daft.ie house price report and no guarantee that they will bottom out anytime soon, their reluctance to lend is understandable.

You don’t give much information about your mortgage but from the outstanding balance you quote I suspect you are on a very long repayment term and may not have a tracker rate.  Mortgage advisor Karl Deeter of Irish Mortgage Brokers says it could be difficult for your sister to get a better finance deal. Since you will be taking a loss to whomever you sell this property, he suggests that if your sister is happy to take over the apartment, you might consider circumventing the banks altogether: instead of legally transferring the deed, set up a tenancy in common agreement with her your sister to take over the repayments on the existing mortgage, ideally with her paying you some of her savings as a ‘downpayment’. 

Defacto ownership of the property can be transferred slowly from you to her with an annual, tax-free capital gift worth the equivalent of €3,000 per annum, says Deeter, represented by slivers of the apartment – with the balance of ownership left to her in your will.  If she wants to sells the apartment some day, you can come to an agreement with her over your share of the sale, based on how much capital you both now own. Speak to a solicitor about how this private arrangement should be set up and be clear about the tax implications should she unexpectedly inherit the property.

The risk to you in this arrangement, says Deeter, is that your credit record could be affected if your sister doesn’t keep up repayments, but without a lender or a separate cash buyer for the property on the horizon, this might be the cheapest and most suitable arrangement if you really want to be shot of the property.

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Insurance options

MMcC writes from Dublin: After last week’s news about the VHI price hikes and how the other companies will also probably be raising their rates this year I went onto the HIA website (I couldn’t contact VHI directly) to try and find out what the corporate equivalent of Plan B Options is and the benefits.  Frankly, if was very confusing. 

Last week the VHI’s website and Health Insurance Authority comparison website (www.hia.ie) were very busy, as were all the customer help-lines, including those at Quinn and Aviva. With over 200 different insurance plans available and lots of subtle differences – especially about pre-existing medical conditions and the cost of child membership - it isn’t easy to shop around which is where a good, fee based advisor comes in. In my opinion, the three, best informed health insurance advisors in the country are consultants Aongus Loughlin at Towers Watson and Kevin Kinsella at Mercer who deal with corporate clients and Dermott Goode of healthinsurancesavings.ie who deals with both corporate and individual clients.

According to Goode, the corporate equivalent of VHI’s popular Plan B and Plan B Options, which are going up by as much as 45% in February is Company Plan Plus Level One which will cost €805 for an individual instead of the February renewal price €1,430.  The corporate plan equivalent for Quinn’s popular Essential Plus Plan is Company Care which costs €785 instead of €995 while the corporate equivalent of Aviva’s Level 2 Hospital Plan is Business Plan Extra which costs €799 instead of €825.