Dominc Coyle answers your  your financial queries

Reclaiming credit card stamp duty

I know you have covered this topic before but I wanted to know if there is any way of reclaiming stamp duty on a cancelled credit card. I cancelled my Ulster Bank visa in April, having paid duty of €40 on the March bill, assuming it was the 2005 charge.

However, I received a bill for another €40. Apparently, the March fee was for the previous year and although I cancelled my card a month later, I have to pay the 2005 charge.

I feel this is unfair and was wondering if there is any redress with the tax authorities to either claim it back or have it pro-rated?

Ms C.F., Dublin

The bad news is that the bank was entirely correct to charge you the second €40 and there is no way that you will be able to reclaim it.

While banks can choose when to charge the annual sum, most do it towards the end of the period - ie around March. Normally, you would not have faced a further stamp duty charge until next March. However, your decision to close the account in April brought that forward as the bank tidied your affairs in relation to that account.

As you had use of the card beyond April 1st, you were liable to a charge for 2005-2006.

Though it is of little consolation to you, the universal condemnation that this charge has received from all sides of the argument means it is a prime candidate to be annulled soon.

Tax liability

I am sure this is a very simple matter but I have no idea where I stand on tax on our new home. Home ownership had not even crossed our minds until recently as we assumed we would not qualify for a large enough mortgage. I keep hearing about tax relief for first-time buyers but what exactly are these?

Mr D.S., Dublin

It is always the case that we never address these things until they are relevant to us. There are two basic tax reliefs available to first-time buyers.

The first one, which is not insignificant to people facing whopping monthly mortgage bills, is a stamp duty exemption. First-time buyers pay no stamp duty on the purchase of new homes with a floor area up to

125 sq m or 1,345 sq ft. On second-hand homes, they are exempt for stamp duty on amounts of €317,500 or less.

Above this and below €635,000, they pay stamp duty at a lower rate than existing homeowners.

However, if you rent or sell the property within five years, the revenue will claw back duty at the existing homeowner level. Separately, all homeowners are eligible for mortgage interest relief against their income tax, with first-time buyers getting slightly more generous allowances for the first seven years of the loan. This is now given as a tax credit and should be deducted at source by the mortgage lender.

In practice this means that your monthly mortgage payments should be lower than they would be without the relief. First-time buyers can claim relief on €4,000 per annum in mortgage interest as a single person and double that for a married couple.

As tax credits are granted at the basic rate of tax, that means your mortgage payments should be reduced by €800 or €1,600 a year depending on your status. At one time there was a first-time buyer's grant but that has been abolished.

New home

I am living abroad in a tax free country. On my return, I anticipate a nest egg to buy and furnish a new home. Will I have to pay tax on this amount which is in a US dollar account?

Mr B.D., e-mail

The fact that you return to Ireland will not, in itself, trigger a tax bill on your savings. The key issue for the tax authorities will be your residence (in tax terms) while you were abroad.

If you have only been away for a short time and remain tax resident in Ireland, then you are liable to taxation in Ireland on your global earnings, regardless of the status of the country in which you are now residing.

However, if you moved offshore to a tax-free area, it is unlikely you would have chosen to remain tax resident in Ireland, except by accident. You should be able to repatriate your savings, and purchase and furnish your new home without any fear of further taxation.

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