JB from Co Clare writes: My wife and I are packing up and moving to a new life in tropical Australia. Between the proceeds of the sale of our house and savings we will have €200,000 to exchange. Do you know of any currency exchange providers in Ireland or England that would give us a better rate than the high-street bank and, if so, are they as reliable as a bank?
As with any transaction it always pays to shop around for the best currency exchange provider since rates can vary slightly between banks as well as from day to day. Even a slight price variation can make quite a lot of difference on a €200,000 transaction.
On the day last week that I called the three main banks, the market exchange or “spot” rate between the euro and the Australian dollar (the benchmark that currency fund dealers use) was €1 to A$1.66. However, the three main banks, AIB, Bank of Ireland and Ulster Bank were quoting standard rates of $1.57, $1.592 and $1.605 respectively, a difference that equates to about €7,000 on the day. If you had to pay the standard 1% commission this would reduce your fund by another €2,000.
Fortunately, the standard commission is usually waived for pensioner customers and a large sum like this will command a better exchange rate; in Bank of Ireland’s case it was increased from $1.592 to $1.653 to the euro, a saving of $12,200 while AIB quoted $1.66. Both banks warned against a currency draft being used for security reasons and instead recommended an electronic transfer direct to an account in Australia at a cost of between €20 and €36.
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There are online British discount currency traders who might be able to provide a better rate, but currency fund managers like Patrick Hogarty of Alder Capital warn that using an intermediary in another country to exchange your life’s savings is not a good idea.
Finally, rates can fluctuate by the day, but delaying a transaction to try and time the market for the optimum return is a tricky business, even for the professionals.
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Will British sons pay Irish tax?
PE writes from Dublin: I took out Irish nationality some 15 years ago and all my estate is here in Ireland. However, my three sons and all but one (who was born in Dublin) of my 11 grandchildren are British and resident in the UK. Will they qualify for the prevailing Irish tax thresholds when they inherit from me or will they be subject to the lower British thresholds. The estate is totally in Ireland.
As the Revenue Commissioners recently pointed out in this column, Irish capital acquisition tax (CAT) applies whether the disponer or the beneficiaries of the assets are resident in Ireland (and not necessarily citizens). Therefore your 11 grandchildren, regardless of where they live, will be subject to Irish inheritance tax rules which allow for a tax-free inheritance of €46,673 between a grand- parent and grandchild, unless they happen to be the minor child of a deceased parent (that is, your son or daughter); in such a case that grandchild can inherit €466,725 tax-free from you. Any amount over and above those amounts is subject to 20% CAT. A tax adviser in the other country will be able assess whether there is more tax to be paid in that jurisdiction.
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Solicitor needed in property sale
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JC writes from Dublin: We bought a house four years ago which we now wish to sell to my mother-in-law. She will not require a mortgage as she is moving from a larger property and the home is not liable for stamp duty. When we bought the property we did all the necessary searches and nothing has changed in this regard since. My mother-in-law’s purchase of the property will allow us to repay the small mortgage outstanding on the property. Is there any way of avoiding the involvement of a solicitor (or more especially their fees!) in what is essentially a very simple transaction.
The change of ownership of this property requires that the ownership deeds are properly transferred and registered and therefore requires the services of a solicitor.
According to Breen Purcell of the Dublin-based solicitors McDowell Purcell, given that the earlier sale only occurred four years ago, the solicitor who acted for you then is more than likely to strike a lower fee for this job as he/she will be familiar with the case.
Your solicitor could, theoretically, act for both parties, says Purcell, but this is not recommended by the Law Society and transactions between relatives can also go sour. Your mother-in-law should therefore hire her own counsel.
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Regarding stamp duty, the only way this property can be sold without a stamp duty liability is if it is worth less than €127,000. The Revenue will insist that it be paid on the true, market value of the property, even if you are willing to sell to your mother-in-law at a discount, says Purcell. He adds that a solicitor will also be very helpful in arranging, on the day of sale, that the property is first transferred into your wife’s sole name (no stamp duty applies on property transfers between spouses) and is then transferred from her to her mother in order to take advantage of a dispensation which allows stamp duty to be halved on property transfers between a child and parent.
Jill Kerby is co-author of the 2005 TAB Guide on Money, Pensions and Tax. E-mail her at money.ireland@sunday-times.ie or write c/o Money Matters, The Sunday Times, Fourth Floor, Bishop’s Square, Redmond’s Hill, Dublin 2, giving a daytime telephone number. We cannot send personal replies or deal with every letter. Please do not send original documents or SAEs. Information and advice is offered without legal responsibility.