Q&A

Please send your queries to Dominic Coyle, Q&A, The Irish Times, 11-15 D'Olier Street, Dublin 2, or e-mail to dcoyle@irish-times.ie. This column is a reader service and is not intended to replace professional advice. Due to the volume of mail, there may be a delay in answering queries. All suitable queries will be answered through the columns of the newspaper. No personal correspondence will be entered into.

Property

I own my own home in a provincial town, but I travel to Dublin for a few days a week for work reasons. I am considering buying an apartment in Dublin in which I can live during my weekly visits. Will this attract investment penalties, as it is a second home?

Mr K.K., e-mail

Yes it will. You are only allowed to have one principal private residence. Any second residence, outside certain specific exemptions, will be seen as an investment property and subject to the anti-speculative property taxes in force. It would also be subject to the higher 9 per cent stamp duty payable on such "second homes".

If you were married and your family resided in the one house and you in the other for work obligations, there is some leeway, but it would depend on the nature of the arrangement. Buying a home simply because it would be more convenient to stay over in Dublin than to commute from wherever you live would probably not find favour with the Revenue. Basically, the exemption applies only to principal private residences and you would have to be able to argue that one property was your main accommodation and the other the main accommodation of your family.

Holiday home

I am interested in buying a holiday home in Wexford for £135,000 (#171,414). What would my tax situation be? It would be for private use only but would not be my main residence. Am I considered an investor and liable for the 9 per cent stamp duty. Can you explain the 2 per cent for three years?

Mr L.R., e-mail

As I think you suspect, you will be considered an investor and will therefore be liable to pay stamp duty at 9 per cent on the purchase of the property. If you were buying the property to let it out, you might have some chance of escaping the speculator tag, provided you registered with the Government and fulfilled certain criteria. As a purchaser for private use, though, you have no escape.

Regarding the 2 per cent anti-speculative property tax over three years, you will be charged 2 per cent of the value of the property on April 6th in each of the three years after buying the property, assuming it was purchased after June 15th this year. This means that you will be hit not only for a cumulative 6 per cent of the purchase price but, potentially, for a greater amount to take account of any rise in property values year on year.

Under the second Finance Act, which introduced the provisions of the third Bacon report, the April 6th, 2001, market value of properties bought since June 14th this year will be assessed as the purchase price.

This is a self-assessment tax, meaning that it is up to the property owner to state what the market value of the house is. Naturally, it is always open to the Revenue to query this figure. They can substitute their own assessment and can carry out their own valuation of the property.

The tax itself must be paid on or before November 1st of the year of the assessment. If it is not paid by then, the property owner faces an interest penalty of 1 per cent a month thereafter. They also face the risk of the Revenue assessing the property's value, if the property owner has not submitted one already.

Stock transfer

Recently, you had a question relating to the transferring of shares from one spouse to both. In this you said that all that was needed was a form from Dublin Castle. Can you tell me the address to write to in order to get this form?

Mr F.M., e-mail

Can you please amplify your answer to the jointly/singly owned shares question? What form do I get and from which department in Dublin Castle? Is there stamp duty payable? Does capital gains tax crystallise on the "disposal" from me alone by transfer into the joint names of myself and my wife? Is the form sent to the company secretary - surely not Dublin Castle as is implied in your article? Finally, are you sure you are correct in saying that should either spouse die, their half holding will not necessarily revert to the spouse? I thought that was always the case for joint holdings.

Mr D.McC., e-mail

The form you require to move stocks from one name to another is the same regardless of the circumstances of the transfer. It is a stock transfer form and is available from any legal stationers - listed under Stationers Legal in the Yellow Pages. I imagine it would also be available from company registrars, who deal with investor holdings on an individual company basis.

In general, the completed form has to be sent to the stamping branch of the Revenue Commissioners, which is based in Dublin Castle. However, in the case of a transfer between spouses, or from the name of one spouse to joint names of spouses, no stamp duty liability exists.

The form need only be sent to the company registrar. Each public company's investor relations office - or in the absence of one, the company secretary's office - will be able to tell you who acts as registrar in their case.

Transfers of shares in different companies must be filled out on separate forms and forwarded separately to the appropriate registrars.

Transfers between spouses do not alter the situation for the purposes of capital gains tax. The purchase date of the shares is still the relevant date regardless of the date of transfer. All the transfer does is allow the couple to avail of the annual allowance against capital gains tax - £1,000 per head - in full. If only one spouse holds all the shares in their name, they cannot benefit in full as the allowance was made non-transferable, even among married couples, some years ago.

In the event of death, in general the holding does not automatically revert to the other party in the case of joint holdings. Legally, each owner of an asset has the right to dispose of that asset as they wish - within the confines of any contract between the parties. This is true in life as in death.

However, the shares of a spouse who has died do in the case of joint holdings do revert to the surviving spouse. Being a transfer between spouses, it is not liable to probate or to tax. All one needs to do is write to the company registrar enclosing a copy of the death certificate and requesting that the shares be reregistered in the one name.

Sorry for any confusion in the earlier reply on this issue.