The Money Master Factsheet June 24th, 2010.

The Money Master

( in association with KBG Chartered Accountants )

( Cavan, Longford, Carrick-on-Shannon and now Ballinamore )

( www.kbg.ie )

Mark Reilly

June 24th, 2010

 

Slot to deal with listeners queries

 

Questions and Answers :

 

  1. Hey Joe I was thinking of renting out 2 rooms in my house. Do I have 2 pay tax?

If you let out a room (or rooms) in your own house, and gross rents which you receive (before deducting any expenses) is less than €10,000 per year, then this rent will be exempt from Income Tax. However, if the annual gross rent which you receive is more than €10,000, you will be taxable on the entire amount. For example, if you received €10,001, it would all be taxable.

As well as being exempt from Income Tax, the rents are also exempt from PRSI, the Health Levy and the Income Levy.

However in order to claim the relief, you must file an Income Tax return.

The exemption does not apply to rents which a parent receives from their children

 

2. What is the new scheme concerning employing people and not paying PRSI about ?

The Employer Job (PRSI) Incentive Scheme which was originally announced during last December’s Budget was formally launched by the Taoiseach Brian Cowan and the Minister for Social Protection, Eamonn O’Cuiv at the weekend.

Under this scheme, an employer who creates a new job in 2010 for an individual who has been previously unemployed, will be exempt from paying employer PRSI in respect of that employment for 12 months. The maximum number of new jobs that will qualify under the Scheme is 5, or 5% of the existing workforce, whichever is the greater.

To qualify, the person employed must have been in receipt of one of the following payments for a continuous period of at least 6 months:

-         Jobseeker’s Benefit

-         Jobseeker’s Allowance

-         Disability Allowance

-         One-parent family payment

or they must have been on the Work Placement Programme administered by FAS for at least 3 months.

The job must be a new job (as opposed to a replacement job) which is for at least 30 hours a week and which must last for more than 6 months

In order to apply for the exemption, it is necessary for the employer to complete a PRSI 20 form (which can be downloaded from the Department of Social Protection’s website) and to submit an up-to-date tax clearance certificate. When the application is approved, an exemption certificate in respect of the new employee will be issued.  PRSI must be applied to the employment pending approval. The exemption will then apply for 12 months from the date of approval.

 

3. What is the NPPR charge and who has to pay same ? Also what is the PRTB charge ?

The Local Government (Charges) Act 2009 introduces a €200 annual charge on non principal private residences, payable by the owners to the local authority in whose area the property concerned is located.

Collection of the Non Principal Private Residence Charge for 2010 commenced on the 31st March 2010. the closing date is June 30th, 2010.

The 2010 charge is based upon the ownership and status of the property on the 31st March 2010.

Are there any exemptions from the NPPR Charge?You are advised to check section 4 of the Act for detail.  However, the following abbreviated list should act as a guide:

Exemptions:

1.    Principal Private Residences

2.    Where a person partly occupies a dwelling as his or her sole or main residence and avails of the Revenue Commissioners’ Rent-a-Room Scheme

3.    Discretionary trusts or corporate bodies that are accorded charitable status

4.    Where a person is moving house and, in the process, owns two houses for a relatively short period.

5.    Joint ownership of a property after a divorce or separation agreement where the second residence becomes the primary residence of one party.

6.    Where a person who owns a principal private residence vacates the dwelling in question because he or she is long-term incapacitated as a result of physical or mental illness

7.    Where a residence is occupied rent-free by a relative of the owner and the owner resides on the same property or within two kilometres of .the residence in question.

8.   Where a landlord and a Local Authority have a signed contract in place under the Rental Accommodation Scheme for a property, on the liability date i.e. 31st July 2009 and 31st March in 2010 and each subsequent year, the property is exempt from the NPPR charge.

 

Contact the relevant local authority if you are in any doubt about the liability of your property i.e. the County Council or City Council in which the property is located. You will find links to all of the local authorities on our Contact us page.

www.nppr.ie

 

The PRTB was established in September 2004 to resolve disputes between landlords and tenants; operate a national tenancy registration system and provide information and policy advice on the private rented sector.  The PRTB dispute resolution service replaces the courts in relation to the majority of landlord and tenant disputes.

€ 70 per tenancy registered….payable on each new tenant.

Registration is obligatory for landlords.

www.prtb.ie

 

4. I am an ordinary paye worker with no real other income. Do I need an accountant ? Could an accountant help me or save me tax ?

 

As a Paye worker there is a number of tax credits available to you which allow you claim tax back on certain expenses and payments on an annual basis. These include :

Medical and Dental Expenses

Prescriptions

Bin Charges

Trade Union Subscriptions

Rental allowance

Tuition Fees

Employment Expenses

Home carer tax credit.

 

Many people are simply not aware of their entitlements.

Also you may have queries on passing assets to children after your day. Queries on capital gains tax, mortgage interest relief, loan restructuring, student grants and many other financial issues.

KBG offers your initial consultation free of charge, no obligation thereafter.

 

5. Joe where’s the best place to invest money the bank or post office?

Again, we would require some more information :

How much do you have to invest ?

Do you need access in short term to funds ?

Are you willing to invest funds for 3 – 5 years or longer ?

Will you need to borrow monies in the near future ? ( banking relationship )

Interest rates of just over 3% seem to be available on normal deposit accounts today, so if your not getting that from your bank or building society start looking elsewhere.

However, the Governments new solidarity bond, available from An Post will  pay an annual interest rate of just  1% a year (fixed)  with added bonuses for those who leave the money in for five, seven and ten years .
The maximum bonus after 10 years is 40% – so the maximum gross return possible is  50% over 10 years A 50% gross return over 10 years is  4.14% AER . After DIRT this comes to 3.96% AER.
A normal deposit account would need to be paying 5.28% before DIRT to match that rate.

An investment of €1000 in solidarity bonds for 10 years will result in a balance of €1,475.  (3.96% AER Net)…..

For long term investments, this is my recommendation.

A couple of very useful websites that have comparison figures for all the institutions include itsyourmoney.ie

moneyguideireland.com and bestadvice.ie

 

6. I was left a sum of money in my aunts will and was considering investing it. But I have no idea where to start. What would the money advisor suggest?

See question 5

 

7. What is your expert advice regarding LTV mortgages?  What happens if god forbid house prices fall even further ie: reducing the value of your home.

An LTV refers to loan to value, which in simple terms is the loan as a % of the property’s value. The higher the loan, the higher the LTV. For example a loan of € 100,000 on a property worth € 200,000 is an LTV of 50%.

If house prices fall further, which the majority of us hope they won’t, more persons will find themselves in negative equity. ( ie the loan on the property being greater than the value of the property ).This is an unfortunate scenario for persons to find themselves in, but part of life right now.

 

8. I want to start a pension as I’m in my mid 30’s. I have a young family and only work part time hours. What would be the best option for me?

The first piece of advice to get an independent financial advisor to do a full financial review of the entire situation. This review will lead the advisor to put the correct options forward to the client. The review covers all aspects of a persons financial needs to include…savings / investment / mortgage / protection / retirement…

Itsyourmoney.ie is a very good website to get a person started regarding any financial need.

 

 

www.kbg.ie

24.06.2010. 14:18

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