Dominic Coyleanswers your questions

Active memory

I had a five-year, fixed-term investment maturing earlier this month with First Active. I got no notification of maturity so I rang them a few days before the maturity date to remind them. I was informed there was no record of that account. I made an appointment to visit and, following a search by staff, was again informed that no such investment existed.

My memory is not the best and I would have accepted that, except that I had one A4 sheet with some evidence. After some phone calls, it was confirmed that I had such an account.

The €20,000 invested at 25 per cent interest after five years gave €25,000 gross and I was given a net figure. Having been a maths teacher, I asked for a pen to confirm the net figure and found an error of approximately €600. The salesman said he was not sure of Dirt rates. Can you tell what it is? I await payment.

I can only wonder what would happen if:

(a) I trusted them;

(b) my memory had become more frayed;

(c) I had no knowledge of maths.

I still have other products with First Active.

Mr H.L., e-mail

I admire your forbearance. If I had endured the experience you outline above, I'm not sure I would still be interested in doing business.

On the specific points you raise, Deposit Interest Retention Tax (Dirt) is levied at 20 per cent of the interest and is deducted annually. There is no other Dirt rate and there is absolutely no reason why even the most junior clerk in any retail financial organisation would not know this off the top of their head.

Tax on old home

I purchased a house in June 1999 for €130,000. Following my marriage, we bought a new home in the summer of 2006 for €815,000 with the aid of bridging finance. In September 2006 we put our old house on the market. At first there was strong interest in the house and an offer, but that fell through.

We have rented the property for the past year without incident but we still need to sell the old house in the short term as the mortgage on the new house is difficult to manage.

Someone has told me that, when and if we get to sell the old house, we will be liable to 20 per cent capital gains tax. But my question is 20 per cent of what, and do I still have any window left to sell the old house in order to avoid tax?

Mr P.McD., Dublin

First up, you do not have any window left to sell the original house and avoid tax. There is such an opportunity, but you are now outside it, so you will have a capital gains tax bill. You bought the property in June 1999 and lived in it until August 2006. On houses that were originally principal private residences, such as in this case, the final 12 months of ownership is deemed to be owner-occupied - regardless of reality - and so is also excused from capital gains.

In your case, at this point, this leaves you liable for capital gains tax on just one month of your eight-year, three-month ownership - and, as such, the figure is relatively small, about 1 per cent of any gain.

Allowing for indexation on the original purchase price to take account of inflation, and the €1,270 exemption to capital gains that applies in any one year, the bottom line for you would be a bill of about €2,300. This calculation is based only on the purchase price of the house and the current value of the property.

You are also entitled to deduct the costs incurred in buying and selling the property - including legal fees - before assessing capital gains. Ultimately, that means you have only a very slight capital gains tax exposure just now. However, that will grow as time passes before the sale of the property.