Should we apply for the help-to-buy scheme as it ends in December?
Q I’M a 30-year-old male. I have €12,000 in savings. I am a teacher in Limerick with a permanent job. I am currently earning €43,000 a year. I am saving €800 a month. I have no loans. I am renting. My girlfriend is working and renting in Dublin. She is 27 years old. She currently earns €38,000, excluding an annual €2,000 bonus. She has €3,000 in savings and is saving €700 a month. She worked in Limerick for four years and got promoted to work in Dublin with the same company. She hopes to return to Limerick in the next year but we aren’t sure if it will happen that soon. Should we apply for the help-to-buy scheme before it ends in December? If my girlfriend was to remain in Dublin for another few years, should I look at investing in a property that
I can rent out to others? AIF you are both first-time buyers you can go for the help-to-buy scheme, but you need to buy within the rules of the scheme. That means finding a newbuild property where it is offered and that it will be finished before the cut-off date, according to Karl Deeter of Irish Mortgage Brokers.
If you are going to buy in Dublin and may move back to Limerick one day then it would make sense to ensure you buy where somebody else might rent from you. If you plan to stay in Limerick why don’t you buy there and then do rent a room where you can get up to €14,000 a year tax-free?
You need to make a decision if a property purchase is the right thing for you to do this year. If it is then make sure that at least one of you use the place. As you don’t live in the same city and aren’t married you may be best served keeping your affairs separate for now, Mr Deeter said.
Q I AM going away travelling soon for five weeks. Luckily, I have a good neighbour who has agreed to check in on my home from time to time while I’m away. But I am a bit worried about the water and pipes in the event of a cold snap. Is there anything I can do before I go to prevent freeze or thaw damage?
A ONE of the best ways to preventdamage is to make sure that your water pipes and cold-water tank in the attic are insulated with good quality lagging. This is a must, as exposed pipes are likely to freeze, according to Jonathan Hehir, managing director of Insuremyhouse.ie. He suggests checking the attic and exterior walls for any small holes or exposed points where freezing air can get through, and to insulate with some foam insulation if necessary.
Before you go, it’s a good idea to ensure that your gutters are clear of debris as this will decrease the chance of ice forming on your roof.
It is also wise to drain or shut off any outside plumbing fixtures, such as outdoor taps and garden hoses, to ensure they don’t freeze, Mr Hehir says.
Q I AM a widower who has one son. I have recently been advised to consider an inheritance tax policy as I have three houses, an ARF (Approved Retirement Fund) of €400,000, a couple of life policies and savings of about €200,000. Financially, I know I’m very fortunate. I sold my business some years back and invested the proceeds. My accountant has advised me that upon my death, my son would have a tax bill of around €400,000 on his inheritance, and has suggested taking out a Section 72 policy. Is it a sensible option? AFOR that size of an estate there are limited options available to you, based on the information given. Mike Knightson of KMFinancial.ie suggests reviewing your life policies and seeing if they are already Section 72 inheritance tax policies. If not, then it may be wiser to consider cancelling them as they are only adding to the tax bill on death.
A Section 72 inheritance tax policy is a Revenue-approved life insurance policy. The proceeds of this policy are tax-free when used to settle an inheritance tax bill and it is the only type of policy that can be offset against a capital acquisition (inheritance) tax liability. They were previously called Section 60 policies. These policies are becoming more prevalent as asset values have increased and currently there are only three companies offering them in Ireland, Royal London, Irish Life and Zurich Life. Considerations when taking one out are your health, age, premiums and cash flow, as these policies can be quite expensive.
Mr Knightson says it might be worth looking at the Royal London policy, as it has a unique (in Ireland) benefit called Life Changes Option.
One of the options on this policy is that it allows you to stop premium payments in the future and not lose all of the benefit provided by your policy after paying into it for at least 15 years. Talk to an impartial broker for advice.