The Sunday Times - Money Questions 13/09/09

Posted by Jill Kerby on September 13 2009 @ 20:19

MM writes from Dublin: I purchased a house in January 2006 as first time buyer exempt from stamp duty. I rented it out first in March 2008. What is the clawback in stamp duty? 



According to the Revenue, prior to December 5th, 2007, there was a five year period from the date of purchase in which you could not rent your home or you would face the clawback of a portion of the stamp duty, unless the rental period occurred in the third, fourth or fifth year of ownership. Clearly in your case, the property was rented out in the second year. In this case, you are liable to pay back the difference between the higher stamp duty rates and the duty paid and it becomes payable on the date that rent is first received from the property. In 2006 the first €317,500 of the property’s value was exempt and the balance, assuming it cost you more than €317,500, is subject to stamp duty clawback at 3% up to €381,000 or 6% up to €635,000 or 9% over €935,000. You don’t say how much you paid, but as a first time buyer, hopefully if will not have been much above the €317,500 threshold. For more information about stamp duty clawbacks see http://www.revenue.ie/en/tax/stamp-duty/leaflets/section-92b.html 



AR writes from Dublin:  I was wondering whether I should either save €30,000 I have in an Anglo Irish fixed account at 3.8% interest for one year, or as I read in a recent Sunday Times Money page, An Post’s tax free three year fixed rate bonds at 10% or 3.25% a year?  The reason I am asking is that the interest rate might go up during next three years but my money would be already tied in for three years in the post office.    I would be grateful for your opinion. 

The Anglo Irish account is subject to an automatic annual DIRT deduction of 25%, reducing the net rate of interest to 2.85% after 12 months. Your €30,000 deposit will therefore be worth €30,855 after tax.  The post office savings bond after three years will be worth €33,000, but as you say, you must tie up your capital for three years. If you do not foresee a need to dip into your lump sum, the post office bonds are clearly better value, especially now that we are experiencing a deflationary period – your money is not being whittled away by price inflation. Both An Post and Anglo Irish Bank are state owned entities. Both An Post and Anglo Irish Bank are state owned entities, and therefore enjoy a permanent state backed guarantee but I think it fair to say that An Post has a far better reputation for trust than the disgraced Anglo Irish Bank.






TB writes: I am (or was) a Waterford Wedgwood shareholder – the shares are now delisted. I assume that these shares can now be counted as a loss for CGT purposes for the tax year 200 but in the process of moving house I seem to have mislaid the documents. I contacted the share registrars (Capita) who told me I must contact the receiver.  I contacted the receiver who told me that they cannot provide details of shareholdings. I am now at a loss as how to proceed so as to determine the exact loss and get documentary proof for Revenue purposes. If you could provide assistance with this it would be much appreciated.



The Receiver, Deloitte & Touche, was extremely unhelpful initially, despite the fact that Capita, the share investor service in Dublin where the details of your shareholding were kept – confirmed that the Waterford share account material had all been turned over to the receiver.  Eventually Deloitte finally issued a terse statement:  “The Receiver was appointed over the assets and undertaking of the Company.  He has no authority over the shares of the Company.  It is a matter for the Company’s Directors.”  What this means, said a spokesman for the Director of Corporate Enforcement who I also spoke to on your behalf, is that you must contact that Waterford Wedgwood plc directors – in administration - directly and appeal to them to intercede on your behalf to get the replacement certificate.  Their office is at Hill House, Little New Street, London, EC4 A3TR, telephone 0044205 8427.  (I tried that number several times and was unable to make contact.) If that does not produce the certificate, your last option, said the Corporate Enforcement spokesman is to go to the High Court to enforce the articles of association under the 1963 Companies Act 1963 which states that you are legally entitled to a replacement share certificate.  The cost of this would be prohibitive so hopefully you can resolve this through the administrator’s office in London. 



WP writes from Dublin: My wife and I are soon moving permanently to Spain where we have been semi-retired for a few years.  We were lucky enough to sell our house in Dublin last year for a very fair price.  We have three grandchildren, two of whom will be doing their leaving certificates next year and the other one in two years, who are already named as the beneficiaries of our will.  We have told their parents that we will pay for their third level fees if they are re-introduced, but someone told me that if we give them this kind of money before we die (we anticipate spending at least €10,000 a year on the first two grandchildren) it could affect how much tax they would have to pay when we are gone. Is this correct?  Is there any way we can get around this? 

What generous grandparents you are!  The tax-free inheritance threshold between a grandparent and grandchild was reduced from €54,254 to €43,400 in the April mini-budget and the capital acquisition tax on amounts over this sum is now 25%. However, you can give each child €3,000 every year without triggering any tax or even any need for them to declare the gift under Capital Acquisition Tax rules.  If you start making these gifts now, especially to the younger child, it should meet some, or all, of the annual college fee. If it is not sufficient, you could always give the balance to your son or daughter for the child’s use under the same €3,000 rule. The grandchildren can then still inherit from you and not face any extra tax liability than that which will apply at the time on a bequest from a grandparent to grandchild. 

0 comment(s)

Leave a comment

Subscribe to Blog