Your personal finance questions are answered by Dominic Coyle
Pensions
I am a retired civil servant with a pension of €31,000 per annum. Throughout my working life, I paid superannuation plus PRSI at the reduced level for those working in the civil service. I have savings of €60,000 approximately.
My wife, who also worked in the Civil Service, had to resign on marriage in 1964. She did receive a very small gratuity then.
She has not worked outside the home since then. We will both be 70 years old this year. Is my wife entitled to an old age pension of any kind, and if not, why?
Mr T.R., Dublin
It appears from the information that you provide that your wife is unlikely to qualify for a pension in her own right. The State pension comes in two forms - contributory and non-contributory. The first is dependent on having paid a certain number of stamps each year since a person first enters the workforce.
Given that your wife left the civil service in 1964, it is unlikely that she would have had enough contributions to qualify.
The second option is the non-contributory pension. This is essentially the safety net to ensure people do not slip below a perceived poverty line. As such, it is subject to a means test. Unfortunately, the means test takes into account the earnings of both spouses in assessing whether one or both is entitled to a payment.
In your case, your wife would fail the means test on the basis of the income you are bringing into the house from your pension.
The remaining possibility is that you can receive an adult dependent allowance on top of your pension in respect of your wife. This could lead to a payment of up to €138.50 a week in respect of your wife. It might not be a pension in her own right but it is worth having if you are entitled to it.
Property
I am a professional working and living abroad. I left Ireland in September 2003 and have no immediate plans to return. I have a house which I currently rent out. At what point would I be considered non-resident and have to pay capital gains tax if I sold the house?
I have a feeling this is three years. If I return to Ireland, how long could I live in the house before I sell it in order not to trigger capital gains tax?
Mr B.J., email
I think you are confusing a couple of things. If you are no longer resident in Ireland for tax purposes, then capital gains in this jurisdiction are unlikely to be an issue.
In general, you remain ordinarily resident in Ireland for three full tax years after the year in which you leave the State. That status means you remain liable to tax in Ireland on your income worldwide apart from income earned on employment or trade carried on wholly outside the State. This means that income from the sale of property would be liable to capital gains tax.
Once you are no longer ordinarily resident, you would presumably come under the capital gains tax regime of the country in which you are then tax resident.
As to what the capital gains liability would be if you are a tax resident here, you would have to pay capital gains on that portion of the gain which is accounted for by the period during which the house was rented.
For instance, if you lived in the house as a principal private residence for seven years and rented it for three before selling it, you would face capital gains tax on 20 per cent of the gain. That is because the last year of ownership is assumed to be as a principal private residence regardless of the actual situation. So the property is deemed to have been rented - and therefore an investment property - for two of the 10 years of ownership or 20 per cent. Capital gains tax would be levied at 20 per cent.
The fact that you return to live in the property will not turn back the clock on the period of rental. Regardless of how long you reside in the property, the period for which it was rented will still be liable to capital gains tax, again on a proportional basis.
The situation when it comes to rent is different. In that case, you will be liable to income tax on the rent in the Republic regardless of where you are resident for tax purposes.
Irish Nationwide
In 1988 I invested £500 with the Irish Nationwide in a deposit account and this gradually grew by deposits to an all-time high of £1,600 in 1992.
This amount then steadily decreased as a result of withdrawals to an all-time low of £60 in December 1995.
Once again, I gradually lodged to the point where I now have €2,000 on deposit. The amount never went below the £60 point and I was wondering if, under these circumstances, my situation is any different to, say, the normal investor who maintained a higher amount on deposit all through when it comes to the possibility of a windfall. Or does it matter once you always have some money, without a break, on deposit?
Mr S.O'N., Kilkenny
The biggest issue for you at the outset is not the amount that you have had in your account down the years but the type of account it has been in.
You refer continually to having a deposit account with the Irish Nationwide Building Society. The problem is that deposit accounts do not grant the holder membership of the building society and only members are going to be eligible for any windfall.
The type of account you actually hold is critical to this issue. It may be that your use of the word deposit is simply a slip of the tongue but I would suggest that you immediately determine exactly what sort of account you have at Irish Nationwide.
There are several ways to do this. You can and should write to the secretary of the society at: Irish Nationwide Building Society, Nationwide House, Grand Parade, Dublin 6 or, if you prefer, by email to the.secretary@inbs.ie, enclosing full details of the account including the number and the precise name of the type of account. His office should be able to rule definitively on the account status.
Another way to get a decent idea of whether you are likely to qualify is by reference to annual general meetings of the society. Only members of the society have right of attendance and voting at annual general meetings, so if you have been receiving notice of meetings, motions and voting cards, then the society clearly considers your account to be of a type granting you membership.
Having cleared that hurdle, if you do, it would appear to me that the balance of the account as outlined in your letter would not hinder you from receiving a windfall when the society is eventually demutualised and sold. Again, you can always check that with the secretary. If you are not happy with information from the society, you can always contact me again.
Please send your queries to Dominic Coyle, Q&A, The Irish Times, D'Olier 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.
