Q&A: I have Verizon shares, so do I also own Vodafone stock?

I have recently received a letter advising me to sell my Verizon shares, which number four in total. Have I still got Vodafone shares?

Mr HR, email

Unless you sold them in the past two years, you certainly do. And for what it is worth, Vodafone, like Verizon, is also starting a low-cost selling programme for small shareholders in Ireland and Britain.

The company, or rather its registrar, Computershare – the same as Verizon – is sending out letters to all Irish shareholders with fewer than 1,000 shares. If you get one of those, you are definitely a current shareholder.

Even if you don’t, you may have moved from the address Vodafone/ Computershare has for you.

It is important not to get confused between the forms as they relate to different stock and the two schemes have different closing dates.

For Verizon, you need to get the forms back by tomorrow – February 17th – while though you should have already received the Vodafone forms, that selling exercise does not even begin until next week – February 23rd.

As I say, the Verizon share only came to you in early 2014 by virtue of your ownership at that time of shares in Vodafone. Essentially, Vodafone had a US business that it ran jointly with Verizon and it decided to sell the business to its partner. As a result, among other things, Vodafone shareholders got Verizon shares and some cash.

So you would not have the four Verizon shares unless you already owned some Vodafone shares. At the time you got one Verizon share for roughly every 39 shares you owned in Vodafone, so you probably have around 155-160 shares in Vodafone.

Unless you recall selling those Vodafone shares since February/March 2014, you still have them somewhere. If in doubt, call the Vodafone/Computershare helpline on tel: 0818-300999.

Inheritance tax and capital gain for Scottish family

My wife’s brother left his house and some land in Ireland to my wife, my daughter and myself. My wife is Irish but now lives and works in

Scotland

. My daughter and I are Scottish.

Assume the house and land are valued at €100,000 at the point of his death. After paying our share of inheritance tax, it is our intention to sell the house and land.

So I have three questions:

a) How much capital gains tax would the three of us have to pay if we sold the house for the same value (€100,000)?

b) Do we receive any reliefs as in inheritance tax ?

c) Does the amount we paid in inheritance tax come off our capital gains tax bill?

Mr RC, email

As the house and land are based in Ireland, you will be subject to Irish inheritance tax.

Under Irish law, there are different thresholds before the tax – levied at 33 per cent – kicks in.

These thresholds are determined by the relationship of the beneficiary to the owner of the asset.

In this case, as a sibling, your wife is entitled to receive an inheritance worth up to €30,150 before becoming liable to tax. You should be aware that this is aggregated with any previous gifts or inheritances she may have received from siblings or other linear relations.

She can, however, receive gifts or inheritances from a parent under a separate and more generous Category A allowance. Simple, isn’t it?

The same threshold applies to your daughter as a linear relation, with the same rules on aggregation with any previous gifts or inheritances from linear relations.

You qualify only as a stranger, Category C, where the threshold is €15,075, and again the aggregation rules apply.

Once we get past inheritance tax, you’re going to sell the land and house.

If you sell it for the same price, no capital gains applies as the Revenue is only interested in any increase in value between the valuation date for inheritance tax purposes and the actual sale price – so no increase, no tax.

The only relief on capital gains is an annual exemption of €1,270 per person. This is an individualised and non-transferable relief but as all three of you would own this property, you would have a combined capital gain threshold of €3,810. Thereafter, all gains are taxed at 33 per cent.

There is no offset against capital gains for any other tax paid – ie inheritance tax.

Gifts and loans to help buy a home

My boyfriend is going to receive a gift of €280,000. The house he is buying is €375,000 and he has €40,000, which leaves the remainder of €55,000. His parents currently have this available which they could loan us. Would this be liable to tax? Would we have to pay back a minimum amount by a certain time?

Ms CR, email

This question is one that comes up regularly. Your boyfriend is receiving the gift from his parents, I assume.

If so, since last October’s budget, he can receive up to €280,000 from his parents in gifts or inheritance before having to pay tax.

So there is no problem there – although I should mention that he will be obliged to complete an IT38 inheritance tax/gift tax return to the Revenue as the gift will exceed 80 per cent of the amount he can receive under what is called the Category A threshold governing gifts and inheritances from parents to children.

He won’t have to pay tax, but just has to notify Revenue so they know that he is close to or at the threshold.

In relation to the additional €55,000, it is possible to have this treated as a loan but only if he (and you?) are paying interest on the money at “market rates”.

This is useful especially for people who can afford to repay the money but might not be in a position to borrow from the bank. I should say that if you can get a bank loan, it is worth considering instead as it might help build a credit rating that could be useful later.

Whether you make repayments monthly, annually or in a lump sum at some future point does not really matter; the issue is that if it is a loan, it must be repaid at some time, preferably agreed by both parties in writing.

If, however, the money was an “interest-free” loan, it could be seen in part as a gift and incur a tax charge. Send your queries to Dominic Coyle, Q&A, The Irish Times, 24-28 Tara Street, D2, or email dcoyle@irishtimes.com. This column is a reader service and is not intended to replace professional advice