Q&A

I recently sold some British shares. In addition to the capital gain in sterling terms, I also made a currency gain because of the rise in sterling visa-vis the pound since I bought the shares. How does the Revenue treat such gains?

Mr B.B., Malahide

The Office of the Revenue Commissioners tells me confidently that its only interest is in the capital gain on the sale of the shares. In order to calculate that in pound terms, what it does is take the price at which you bought the shares and convert that into pounds using the official Central Bank conversion rate for sterling on that day. In calculating the gain, it takes the same Central bank sterling conversion rate on the day the shares are sold.

As far as it is concerned the difference is the amount on which you owe capital gains tax. Any currency differential beyond that is of no interest to the tax office.

Although, you did not specifically ask, it might be worth pointing out to other investors in foreign equities that the Revenue considers all gains from the sale of such investments to be taxable in Ireland once the investor meets the residency requirements for taxation in this jurisdiction.

I am thinking of refinancing my mortgage through a less expensive lending agency. Is there any rule of thumb for legal costs in this scenario? I know it is usually 1 per cent of the property plus £100 but I don't see how this could apply in this case.

Mr B.D., Dublin

I understood the situation with legal costs at the point of purchasing the property to be along the lines you outline. However, the latest information available to the Law Society indicates this might have changed during the recent surge in house prices.

According to a 1996 survey of the Dublin Solicitors Bar Association, the average charge for contemporaneous mortgages those taken out at the time of buying the property is one-half of 1 per cent of the mortgage drawn down. For a property of £100,000, on which the borrower is taking a 90 per cent mortgage £90,000 this would indicate an average charge of £450.

The average charge for a noncontemporaneous mortgage i.e. those taken out after the purchase of the property to remortgage that property or in switching lenders, such as in your case was £395 according to the same 1996 survey.

There does not appear to be much difference between the figures and I would hazard a guess that the bill for all but the most basic legal fees would outstrip the one-half of 1 per cent of mortgage guideline in the survey in the case of new purchases. However, the latter figure of £395 sounds about right, although the survey itself is more than one year old.

As the Law Society pointed out, it is precluded from telling solicitors what to charge for their services under competition law. This leaves solicitors free to charge any fair and reasonable fee for their services and that, by definition, will change from one firm to another.

The best advice seems to be to shop around for the best service and the appropriate fee.

I opened an account with the First National Building Society 30 years ago at a time when one simply lodged money and there was no discussion on the type of accounts available. At no time in the intervening years was I in receipt of advice from FNBS staff on the merits or otherwise of the different types of accounts. Last summer, I called to my branch to change my deposit account of 30 years to a share account. I filled out the necessary forms to do so but was informed verbally last September, following an official ruling from Dublin, that this was not possible. In the circumstances, I find it hard to accept that I am not entitled to benefit from the society's proposal to become a public company. What should I do?

Ms G.M., email

Every time another company decides to demutualise, a range of previously-unforeseen problems emerges. However, it is hard to believe that you would be alone in your position. There must be a host of older account holders with First National and others who have merely used accounts opened in a much less sophisticated bygone age to salt away savings. Indeed, I would have thought the issue would have arisen certainly with Irish Permanent and Norwich Union.

While it seems clear, in the black and white terms of the provisions within conversion statement, that you would not be entitled to an allocation of free shares in respect of your deposit account, there is a possibility that you would have a case to press for an allocation if there was only one type of account at the time you opened yours and if you subsequently received no notice of the changing nature of building society accounts as you say in your letter.

The only way to ascertain this is to get a thorough review of the society's action in relation to your account. I would suggest that you get a professional opinion from a solicitor.

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