Dominic Coyle answers your financial queries.

Offsetting losses against tax paid

My wife and I were among the thousands of mugs who bought and held Eircom shares.

My problem is that I paid tax on the sale of other shares last year without realising I could offset the gain against our Eircom losses. I am now unable to find the relevant details about our Eircom holdings, despite contacting Eircom and the brokers involved.

I don't even remember how much we paid, the number of shares or the price at which we sold. Any ideas how we could get the necessary information as I appear to have dumped everything?

Mr G.M., Limerick

There are clearly two issues here. First of all, you need to find out the details of your holding. Second, you need to figure out how to treat your outstanding capital loss on the Eircom transaction.

On the first point, I am surprised your broker would have no details of the acquisition of your Eircom shares and any subsequent disposal - such as the sale of the Vodafone shares you would have acquired in payment for the acquisition of the Eircell element of the original phone company.

Of course, if you still hold your Vodafone shares, you will be able to calculate how many Eircom shares you once held.

If none of that works, I would contact Computershare, the company that held the share register for Eircom. It should be able to track back details of your holding.

Having done that, there remains the question of how to treat your capital loss on the Eircom fiasco. You say you inadvertently paid capital gains tax on gains realised in a subsequent year.

Obviously that was an error. The Revenue tells me that you need to file an amended capital gains tax form - CGT1. The Revenue will then issue an amended assessment and, if it is due, a refund of overpaid capital gains tax.

Transferring mortgage to Spain

In the business supplement last week, there was a small article stating that IFG Spain is advising that those who have bought in Spain over the last decade should now transfer their mortgage to Spain in order to avoid higher tax bills. Can you please explain how this would lead to a reduced tax bill and how failure to transfer the mortgage would lead to a higher tax assessment by the Spanish authorities?

Mr R.B., Carlow

The first thing to bear in mind is that the advice to relocate mortgages on Spanish property to Spain came from a company whose business is largely providing precisely that sort of product.

That aside, it is certainly the case that there are differences in the Spanish tax code that need to be borne in mind when assessing how to structure the finance of a property purchase there.

The significant difference is in relation to inheritance tax. First of all, inheritances between spouses are liable to tax, unlike the situation in Ireland. As a result, your dream home could become a millstone.

There are also various bands of inheritance tax, rising, I gather, to as high as 34 per cent. On top of this there can be multipliers depending on the relationship between the disponer and the beneficiary. It can all amount to a significant bill.

Inheritance tax is assessed on net asset value in Spain, so having a mortgage within the jurisdiction to set against the property value could help.

Similarly, all foreign property owners in Spain are liable to an annual wealth tax. Again, this is assessed on net asset value.

On both counts, a Spanish mortgage would serve to reduce the tax bill, though in the case of wealth tax, the mortgage must have been used for the actual property purchase. It is of no use if it was a remortgaging exercise.

Anyone considering such a move will also have to examine Spanish interest rates, which appear on a par with Irish loans. However, local banks can attempt to charge substantial arrangement and redemption fees at the beginning and end of a loan.

Remember that there will be additional legal costs involved in getting such a mortgage, as an independent lawyer is highly recommended for foreign transactions such as this.

By the way, the general advice that one should carefully check a local tax code before buying property in a foreign country is one that should be close to the top of any prospective property purchaser's checklist.

Please send your queries to Dominic Coyle, Q&A, The Irish Times, 24-28 Tara Street, Dublin 2, or e-mail to dcoyle@ irish-times.ie. This column is a reader service and is not intended to replace professional advice. Due to the volume of mail, there may be a delay in answering queries. All suitable queries will be answered through the columns of the newspaper. No personal correspondence will be entered into.