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You could pay taxes to the Irish government even when your investments make a loss...

  • 09-04-2010 10:17am
    #1
    Manachan
    Registered Users, Registered Users 2 Posts: 13 ✭


    I was considering beginning some long term investments and have started to do a little research.

    I was looking at how investments are taxed when I came across the following:

    I will use a simple example to demonstrate the scenario:
    Say you own 2 funds, and you decide to sell them both at a future date,
    - Fund A makes a profit of €10,000
    - Fund B makes a loss of €15,000

    Altogether you make a loss of €5,000.

    But you still have to pay tax on Fund A (currently 28%), so €2,800.

    So, although you make a loss of €5,000, you still have to pay €2,800 to the government. Crazy situation. This is turning me off investing, even when you make a loss, you can pay tax!


Comments

  • #2
    Jumpy
    Registered Users, Registered Users 2 Posts: 7,606 ✭✭✭Jumpy


    *palma de face*


  • #3
    dblennon
    Closed Accounts Posts: 185 ✭✭dblennon


    What are you talking about people sell losses against profits all the time most brokers *we do anyway will recomend this sort of transaction* not the making a loss part, but you can carry losses against profits and nett them off for at least 5 years.

    big thing at the moment is people closing massive banking losses against IT stocks like apple google Microsoft Etc.


  • #4
    Manachan
    Registered Users, Registered Users 2 Posts: 13 ✭Manachan


    Hi dBlennon,

    I would have thought that you wouldn't have to pay tax in the scenario above but I contacted my fund provider and they confirmed in that scenario, you would have to pay tax because each fund is treated separately for tax purposes.

    Note: fund type is Undertakings for Collective Investments in Transferable Securities (UCITS) or SICAVs


  • #5
    gizmo555
    Closed Accounts Posts: 2,948 ✭✭✭gizmo555


    Manachan, you're spot on - for unit linked funds of the types commonly sold by life assurance companies, etc, losses in one investment cannot be offset against gains in another for tax purposes.


  • #6
    dblennon
    Closed Accounts Posts: 185 ✭✭dblennon


    Oh ok well yes, in that situation many funds are subject to an exit tax that is independent of your personal managment of your portfolio.

    If you are planning on mainly trading in these funds would they not be better off in your pension?

    We have not been able to find a way to remove the tax burden on them.

    If you ended up exclusively holding these types of funds then you would not be able to nett the tax difference.

    fingers crossed this is prudent planning rather than selling issues now.


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