Dominic Coyleanswers your questions.

Clawback concerns

I bought my first house in 1998. Since then I have rented part of it but retained a room for my own use at weekends. Now I am selling the house and would be obliged if you could advise me about capital gains tax. The house has not been rented out since last December.

Am I liable for capital gains tax? Does using a room at the weekend (as my home) leave me exempt?

Ms N MacC, Dublin

You are certainly liable for capital gains tax. My bigger concern is that you might also find yourself facing a clawback on stamp duty.

The rules on capital gains tax are quite clear. Once you rent your property out, it is no longer your principal private residence and becomes liable to capital gains tax.

The only exemption, when it comes to renting, is that you are permitted to rent a room or rooms in the property, provided the maximum annual gross income from the arrangement comes to €7,620 or less. If gross rent exceeds that amount - no matter by how little - the relief disappears.

The rent-a-room scheme only applies to a room rented after April 6th, 2001, when the Finance Act provisions came into effect. Of course, your position is rather the reverse of this as you are retaining one room for your own use and renting the rest.

The one relief remaining to you is that the last year of ownership is determined to be as owner-occupier regardless of whether you are renting the property or not. Thus, if you have been renting since you acquired the property in 1998 and sell this year (19 years later), you will be liable to capital gains tax on 18/19ths of the gain.

Before assessing that gain, you will be allowed deduct expenses incurred in the purchase and sale of the property. You are also allowed to index the original purchase price of the property to allow for inflation - at least up to the end of 2002 when indexation for capital gains purposes was abolished.

If you bought your property in the first three months of 1998 for, say, £120,000, you would multiply that figure by 1.232 - giving a "new" original purchase price for the purpose of assessing the capital gain of £147,840 - or €187,720.

If you bought the house after April 1st, 1998, the multiplier would be 1.212, giving a new base price of £145,440, or €184,670.

On top of all that, you have a capital gains tax exemption in any year of €1,270, so you would deduct that off any final CGT liability.

Now turning to stamp duty, first-time buyers have been entitled to relief from stamp duty but, since the Bacon reforms in 1998, they were obliged to remain as owner-occupier of what would be their principal private residence for the first five years of ownership.

By not remaining as owner-occupier, you run the risk of Revenue seeking a clawback of the difference between any stamp duty you paid and the amount that would have applied for non-owner-occupiers at the time.

Ryanair share split

The failure of Ryanair to issue new share certificates following the share split is a fiasco. The longer the matter is left unattended the greater the confusion and the more difficult it will be to put matters right.

Why should shareholders wishing to sell their Ryanair shares have to write a letter to their brokers explaining that in reality they own twice the number of shares, as stated on the certificate?

Last week, I was listening to a business programme on our national airwaves and a question came in from a listener as to why the Ryanair share price had halved in the past year. The expert denied that the price had halved - technically he was correct but in another way he was uninformed. An example of the growing confusion?

The reason why many of us do not want to move away from old-fashioned share certificates is that when we place our shares in the nominee names of our brokers they charge us fees for the service (for whose benefit is the service provided? - they should be paying us!), there are delays in receiving our dividends, we are not sent the annual or interim reports or notices of agms and egms, and we miss the opportunity to attend the meetings. Takeover offers and other corporate actions are not sent to us. So I, for one, have reverted to having all my shareholdings in my own name with original share certificates.

Mr D McC, e-mail

You respond to the recent Q&A where I suggested that a Ryanair shareholder include a letter to their broker reminding them of the fact that their "pre-split certificate" would no longer be accurate in the number of shares it states the investor holds.

You're right. It should not be necessary and, for what it's worth, I am sure the broker - checking with the share registrar - would be quick to ensure that the correct number of shares were traded. I was merely suggesting a "belt and braces" approach - just to be sure. There is, of course, no requirement for you to write a covering note to your broker. You are paying them commission and that should certainly cover the competent execution of the transaction . . . but what do you do if it goes wrong and you have no photocopy of the certificate?

I can't answer for conversations in other forums but it would certainly have been more helpful to point out, as we did in the paper in response to a similar query, that the price might appear to have halved because of the two-for-one share split that would effectively halve the value of each unit.

Such confusion only reinforces my belief that it never does any harm in cases like Ryanair at the moment to include the covering note suggested.

In any case, if the Irish Stock Exchange had its way, and I'm sure it will, share certificates will very shortly be consigned to museums. The exchange is proposing to move to a fully electronic means of holding shares.

However, this does not necessarily mean you are deprived of all information and control over companies in which you have invested.

While it is certainly true that electronic holdings in nominee accounts are lumped together, with brokers receiving all corporate information and having control over decision-making, the same is not true of Crest accounts.

These are also electronic accounts - and yes, you will pay the broker to manage them - but the investor receives all communications from the company in which they hold the shares and makes all the voting decisions on agm and egm motions. The other advantage is that trading costs will be reduced.