The Sunday Times - Money Questions 19/07/09

Posted by Jill Kerby on July 19 2009 @ 21:09

MC writes from Limerick.    I have €11,000 remaining in a Bonus Interest Account with Permanent TSB, the result of an SSIA.   It is no longer earning interest in this account and I would be grateful if you could advise what account would be best to lodge it with a view to leaving it there safely.  Also I took out a policy with the Permanent TSB in 1996 which is now worth €4,000 less than I put in.   This was with a view to providing education for my children.   The bank has now informed me that they can give me no information on this account as it is Hibernian Aviva who hold the account.   My monthly repayments are €150.   The current value of policy is approximately €9,000 approx.  Any suggestions for this money? 


The collapse of stock markets in 2008 and the first quarter of this year has been a major blow to everyone from parents saving for their children’s education, like you, to your parent’s and their hopes for a comfortable retirement. Of your two sums of cash, the €11,000 is by far the easier to sort out:  the best yielding demand deposit accounts is from Halifax with a 3.75% gross yield. If you are willing to leave your money on 35 day notice, your existing bank, the PTSB offers 3.5% gross. If you are willing to fix your term for at least six months you can achieve a 5% return, but I believe you would be taking a risk leaving any money with Anglo Irish Bank, despite the government’s 100% guarantee of deposits – there are some genuinely solvent banks still operating in this country, they just don’t happen to be Irish ones.  As for the €9,000 in your Hibernian investment the chances of you making up these losses in the near future don’t look very good.  The March to May rally in equity markets appears to be reversing and there is very little good news on the horizon for companies or consumers.  If you need to draw down this money anytime soon for the children’s education, there is no point in leaving it in an investment fund with high annual charges, fees and commissions that must be paid regardless of fund performance.  A safe deposit fund is the obvious option if you don’t want to take any more capital risk, even after the 25% DIRT on the interest.  I do not suggest you purchase any of the latest “tracker bonds” that track (and cap the returns) from different stock market movements and guarantee your capital back over a period – usually four or six years.  These are expensive and non-transparent.  You would probably be just as well off buying €1,000 worth of a solid blue chip stock - say Shell or BP or even Tesco, and the remaining €10,000 on deposit for four or six years.  





DMcG writes from Wexford: Briefly, I bought my house in November 2007. It was a new build and I bought as an owner-occupier and paid no Stamp Duty. As a result of the economic climate I need to go to London to find work and I want to rent my house while I am gone. My solicitor said if I did this I would be liable for stamp duty on the house as it would be classed as an investment, which was never my intention. I need to rent it to cover some of the mortgage and if I am liable for stamp duty, which I was told I would have to pay up front, then there is no point in renting. My question is, am I liable to pay the stamp duty and if so how much, and do I have to pay up front? I fully intend to come back to live in the house. I paid €220k. I would appreciate any help you can give.


Your solicitor is correct. As a first time buyer you were entitled to stamp duty relief, but it is subject to clawback provisions.  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 face the clawback of a portion of the stamp duty. The exception was to avail of the Rent-a-Room scheme. This five year exclusion period was reduced to just two years if the property was purchased after December 5th, 2007. But even if the property was purchased before this date – as yours was - no stamp duty clawback would apply if was rented out in the third, fourth or fifth years of ownership.  If you can manage not to rent out your property for another year and a half, that is, once you have owned it for three years, you won’t be liable to any clawback of the stamp duty relief you currently enjoy.  However, if you must proceed with renting out your home, the November 2007 rates will apply.  In your case, the first €125,000 of value is exempt and the balance - €95,000 – will be liable at 7%, or €6,650 and will be payable from the day you receive the first rental payment. For more information about Section 92B stamp duty relief and clawbacks see http://www.revenue.ie/en/tax/stamp-duty/leaflets/section-92b.html 



RB writes from Delgany: I transferred to Quinn HealthCare when they acquired Bupa Ireland’s clients in 2007.My understanding was that Quinn would honour the terms and conditions which existed under Bupa membership. I had a 10% existing group discount which applied during the first year under Quinn, but it disappeared last year. I queried this and was told that Quinn were just responding to government recommendations. Only later did I discover that Vhi continues to give group discounts. Can you throw any light on this?


Quinn Healthcare maintained a price freeze for 2007, the year after it took over Bupa Ireland but from January 2008 it abolished group discounts and introduced a 3% surcharge for instalment payments. This change attracted a lot less attention than I imagined it would at the time – probably because Quinn Healthcare rates were quite a bit lower than conquerable VHI rates, but consumers are increasingly conscious of the escalating cost of health insurance this year, and will be even more so when the full effect of the €260 and €53 surcharges for every adult and child member are implemented by Quinn and Hibernian and are paid over by the government to the VHI.  If you haven’t already done so, you should review your health insurance to make sure you are both in the appropriate plan and are not over-paying for your cover. You can do this yourself by checking out the Health Insurance Authority comparison charts are www.hia.ie or engage a fee-based advisor (see www.healthinsurancesavings.ie).


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