Personal finance: your queries answered

DOMINIC COYLEhas the answers...

WILL I FACE CLAWBACK ON STAMP DUTY?

Q

I bought an apartment off the plans in 2005. In 2006, I decided to go back to college so, when the apartment was ready, I closed and then I sold it straight away. Should I have paid stamp duty? I was a first-time buyer at the time and I got a mortgage and paid it back at the time of the sale.

– Ms A F, DUBLIN

A

You’re safe enough. Then as now, first-time buyers were exempt from stamp duty on the purchase of residential property. There was a clawback arrangement, under which buyers had to repay stamp duty, but this applied only to situations where people rented their home to someone else. Back in 2006, a rental within five years of buying the property would trigger a clawback; in 2007, that was reduced to two years.

However, there was no clawback in situations where people sold the house on to a third party.

IS THERE DIRT ON AN POST SAVINGS BONDS?

I have a lump sum in a current account (€20,000) and wish to put it on deposit with my current bank for three years. They offer 9.5 per cent on a fixed rate for this term. After it matures, it will be worth €21,425 after DIRT at the current rate of 25 per cent. A friend of mine told me that if I invested the same sum in An Post Savings Bonds at 10 per cent over the same period it would be worth €22,000 as there is no liability to DIRT tax. Is this true and, if it is, why is there no DIRT liability? – Mr B O’C, LOUTH

A

Your friend is correct. An Post Savings Bonds are free of all tax, including Deposit Interest Retention Tax (DIRT). An Post has always been treated differently in relation to DIRT. They are also guaranteed by the State – quite outside the current emergency bank guarantees.

At present, An Post Savings Bonds offer a return of 10 per cent for a three-year investment which, as your friend says, is certainly better than the 9.5 per cent before DIRT being offered by your current institution.

DOES A NON-RESIDENT HAVE TO PAY DIRT?

My son, who is permanently resident and working in Australia, has a deposit account with an Irish building society which earns interest, but DIRT is being deducted.

The Revenue website is very clear regarding liability, refunds, notices and claim forms, for residents, but not so for non- residents. What is the position?

– Mr S G, E-MAIL

A

The position for non-residents is that they are not liable to DIRT. There are two issues for your son: getting a refund on the DIRT already paid and making sure he receives future deposit interest without DIRT being deducted.

In terms of getting back DIRT already paid, he will need to fill out a form, Form 54D, which can be downloaded from the Revenue website. For the future, he will need to notify the building society which will require him to complete a “declaration of non-residence”.

This column is a reader service and is not intended to replace professional advice.

Send your queries to; Dominic Coyle, The Irish Times, 24-28 Tara Street, Dublin 2. Or e-mail: dcoyle@irishtimes.com