MORE PERSONAL FINANCE QUERIES
Mr GK writes: I am a retired postman. I drew down my first payment on an ARF and had to pay 4% PRSI. Do the PRSI contributions give me any entitlements?
Once you hit 65 your income will not be liable to PRSI deductions anymore. Meanwhile you are still entitled to its few remaining benefits – the state pension at 65 (if applicable), one free eye and dental check-up and basic treatment, etc. Check out www.welfare.ie for all the benefits you can still collect.
Ms TS writes: We bought a house in 1989 for £30,000 that was our main residence until 2006. We moved but kept this house and rented it out. When we moved out in 2006 we got a €300,000-€310,000 valuation. We have sold it for €263,000. Can we use the valuation we got in 2006 for the purpose of calculating the CGT liability?
The way to calculate your Capital Gains Tax is to take the sale price and subtract the original price you paid in 1989. That is the gain. But you only need to pay the proportionate tax to the number of years that the property was rented out, minus the final 12 months that the Revenue discount as it is assumed that the property is being repaired/renovated/shown to the buying public, etc over that year.
In your case the taxable value is €233,000, that is, €263,000 – €30,000 = €233,000. You owned the property for 25 years but only seven years is liable to CGT on the sale proceeds, so if €233,000 accounts for 25 years profit, €65,240 is the seven years of profit liable to the CGT at 33%. (1/7th of €233,000) Your gross CGT bill should be in the region of about €21,530 but you can both offset this bill with your annual CGT personal allowance of €1,270 and any selling costs.
Ms HW writes: I am looking for independent financial advice that I am willing to pay for. I once contacted an advisor in Dublin who didn’t get back to me. My overall feeling is that these people are only interested in the big investor and not the smaller investor like me.
You are quite right that it isn’t always easy to find a good fee-based adviser. I only tend to deal with fee-based ones, but as you say, some have wealth asset limits and may not be affordable. Unfortunately, so long as commission remuneration is the norm here for the sale of most life assurance and bank investments – it has been finally banned in the UK – fee-based advice will mostly be sought by, and offered to people of greater means. If you have money to invest, keep looking – ideally for an independent chartered certified financial planner or an experienced, licensed financial adviser who will charge you a reasonable fee for a wealth review and recommendations.
Make sure to ask upfront how much is their hourly rate or other fees (plus VAT) and then be sure to go very well prepared with all your accounts, documents, contracts, earnings, how much tax you pay, the value of your assets (house, pension funds, etc), savings, your debt and household running costs. Set this all out in a very clear schedule; it will save them time and you money (in the form of their hourly fee.)
Mr ML writes: I thought I heard somewhere that if a lending institution sells its mortgage book to one of those big overseas investors who are buying them up, these debts become unsecured. Can you tell me am I right or was I dreaming.
Sorry to spoil your dream, but even after mortgages are bundled up, securitised and sold on, their repayment status does not change and the mortgage holder is obliged to keep paying the new owner. Where you have a lump sum to clear the balance of your loan, you could approach the new owner (this has been tried with IBRC loans) and see if they will discount the balancing payment. There’s no harm in trying.
Mr PR writes: I am not a stock market investor but had a bit of money in Waterford Crystal (I had a family connection there and believed in Tony O’Reilly) and as an ex-farmer I also own some Kerry Group shares. I want to offload a small bit of the Kerry shareholding – about €5K in all – and take a punt on Bank of Ireland and INM now. I heard you on the radio mentioning a low cost stockbroker. Can you give me their name?
The execution-only stockbroker in question is Sommerville Advisory Markets (see www.sam.ie) where transaction costs are as little as 0.15% for trades worth up to €10,000.
Are you sure you want to trade in Kerry shares – which have proved so incredibly valuable to their holders for the last few decades – in order to take a gamble on two companies that destroyed so much wealth in recent years and neither of which show much sign of rewarding shareholders either with decent dividend payments or future dividend growth?
It’s never a bad idea to get second or third opinions – especially about gambling on the stock market. I recommend you find a good, impartial financial adviser to discuss your plan – you wont find either at a bank or stockbroker company.
If you have a personal finance question for Jill, please email her at firstname.lastname@example.org or write to Jill Kerby, The Munster Express, 37, The Quay, Waterford
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