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Expat investment advice

  • 20-07-2020 10:23am
    #1
    Registered Users Posts: 5,092 ✭✭✭ James Bond Junior


    Hi all,
    My wife and I live abroad and have non domiciled tax status. We have a rental property (our home but originally bought as a long term investment). It's currently giving a gross yield of about 13% but we have decided to max the mortgage payments to shave as much off the capital as we can whilst living abroad. Our thinking was to do this as we are not paying 48% tax rate on the earnings so it's like free money.

    In the meantime we are accumulating very healthy savings which we send home monthly to an Irish bank account. We plan on coming home this time two years and resume our jobs, both in the public service. I'd ideally like to be able to invest some of the money we are sending home in something that can give us a better rate of interest than a savings account.

    Any ideas?

    TIA.


Comments

  • Registered Users Posts: 5,092 ✭✭✭ James Bond Junior


    Bump on this. Still interested in a 2 or 3 year investment.


  • Registered Users Posts: 8,749 ✭✭✭ Shedite27


    Bump on this. Still interested in a 2 or 3 year investment.
    2 or 3 years is quite short term really, most financial advisors would recommend government bonds or prise bonds for that type of cash, especially as it sounds like you've something planned in 2/3 years (house, wedding etc).

    You need to be able to put it away for 10 years + to start thinking about shares IMO


  • Registered Users Posts: 5,092 ✭✭✭ James Bond Junior


    Shedite27 wrote: »
    2 or 3 years is quite short term really, most financial advisors would recommend government bonds or prise bonds for that type of cash, especially as it sounds like you've something planned in 2/3 years (house, wedding etc).

    You need to be able to put it away for 10 years + to start thinking about shares IMO

    I've looked into prize bonds but can't return to Ireland and getting set up to buy them is difficult. Government bonds may be an option but I wouldn't know where to start.


  • Registered Users Posts: 8,749 ✭✭✭ Shedite27


    I've looked into prize bonds but can't return to Ireland and getting set up to buy them is difficult. Government bonds may be an option but I wouldn't know where to start.

    You should be able to buy them here
    https://www.statesavings.ie/our-products

    To be honest tho, you're probably better off giving a broker a call/email, they'll go through your situation more in depth and may have something more suitable.


  • Registered Users Posts: 3,030 ✭✭✭ Browney7


    Hi all,
    My wife and I live abroad and have non domiciled tax status. We have a rental property (our home but originally bought as a long term investment). It's currently giving a gross yield of about 13% but we have decided to max the mortgage payments to shave as much off the capital as we can whilst living abroad. Our thinking was to do this as we are not paying 48% tax rate on the earnings so it's like free money.

    In the meantime we are accumulating very healthy savings which we send home monthly to an Irish bank account. We plan on coming home this time two years and resume our jobs, both in the public service. I'd ideally like to be able to invest some of the money we are sending home in something that can give us a better rate of interest than a savings account.

    Any ideas?

    TIA.

    Presumably OP when you say 13% gross yield you mean on what you originally paid? If so, I'd expect you are now sitting on a gain over what you've paid for it.

    My own view is your best investment is getting detailed tax advice with your residency/domicile status taking into account how long you've been out of the country and how long you intend to live in the property you have rented out. You may be as well to realise the gain if youre in a nil CGT jurisdiction for example if circumstances dictate.

    I'd echo the above that a 2-3 year investment horizon significantly reduces your investment possibilities


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  • Registered Users Posts: 5,092 ✭✭✭ James Bond Junior


    Browney7 wrote: »
    Presumably OP when you say 13% gross yield you mean on what you originally paid? If so, I'd expect you are now sitting on a gain over what you've paid for it.

    My own view is your best investment is getting detailed tax advice with your residency/domicile status taking into account how long you've been out of the country and how long you intend to live in the property you have rented out. You may be as well to realise the gain if youre in a nil CGT jurisdiction for example if circumstances dictate.

    I'd echo the above that a 2-3 year investment horizon significantly reduces your investment possibilities

    Yes, 13% yield on what was originally paid. I am registered as the day I left as non domiciled so not sure how that will effect things. I lived in the house from 2015 to 2019 and will return in 2022 and it will be our PPR again until we find a bigger house to move on to. I will more than likely not sell unless I need the equity as it is in probably the most rentable area of Limerick city, 20 mins walk to the city centre, hospital and major shopping centre and within 10 mins of an expanding 3rd level college. I bought it as a place to live as houses were cheap and I was sick of house sharing and bought with renting it long term either way.

    We will be able to clear the mortgage by September in full, maybe that's the best investment we could make? We are only 33 and 29.


  • Registered Users Posts: 2,232 ✭✭✭ massdebater


    Where are you living now and what's your residency status there? Are you a dual citizen etc? Could be an opportunity, depending on where it is


  • Registered Users Posts: 5,092 ✭✭✭ James Bond Junior


    Where are you living now and what's your residency status there? Are you a dual citizen etc? Could be an opportunity, depending on where it is

    I'm in Oman. I'm on a working visa so exclusively an Irish citizen.


  • Registered Users Posts: 1,046 ✭✭✭ hold my beer


    How do you become non domiciled on the day you leave? Would have thought a 3 year stint away, with you knowing you're returning in 2022 would mean your still domiciled in Ireland.


  • Registered Users Posts: 5,092 ✭✭✭ James Bond Junior


    How do you become non domiciled on the day you leave? Would have thought a 3 year stint away, with you knowing you're returning in 2022 would mean your still domiciled in Ireland.

    I registered with Revenue as non resident. I used the online portal to tell them as of x date 2019 I was no longer resident in Ireland. They replied to me and even provided me with a tax refund from 2019. Same with my wife.


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  • Registered Users Posts: 3,030 ✭✭✭ Browney7


    I registered with Revenue as non resident. I used the online portal to tell them as of x date 2019 I was no longer resident in Ireland. They replied to me and even provided me with a tax refund from 2019. Same with my wife.

    Be very careful with your tax status. It is very hard to lose "domicile". You may not be resident but domicile is a different concept OP.


  • Registered Users Posts: 5,092 ✭✭✭ James Bond Junior


    Browney7 wrote: »
    Be very careful with your tax status. It is very hard to lose "domicile". You may not be resident but domicile is a different concept OP.

    Maybe I am unsure of the correct lexicon...


  • Registered Users Posts: 1,046 ✭✭✭ hold my beer


    You're more than likely both domiciled, and ordinarily resident in Ireland still. Have a read of the Revenue page here.

    https://www.revenue.ie/en/jobs-and-pensions/tax-residence/how-to-know-if-you-are-ordinarily-resident-for-tax-purposes.aspx

    As poster above said, it's difficult to lose your domicile unless it's a very permanent move.


  • Registered Users Posts: 5,092 ✭✭✭ James Bond Junior


    You're more than likely both domiciled, and ordinarily resident in Ireland still. Have a read of the Revenue page here.

    https://www.revenue.ie/en/jobs-and-pensions/tax-residence/how-to-know-if-you-are-ordinarily-resident-for-tax-purposes.aspx

    As poster above said, it's difficult to lose your domicile unless it's a very permanent move.

    I see, thanks for the clarification.


  • Registered Users Posts: 5,227 ✭✭✭ The J Stands for Jay


    It looks to me like you are still domiciled and ordinarily resident in Ireland. Irish tax is likely still due on the Irish rental income (if you're not using an agent, the tenant should be deducting 20% tax from the rent and paying it to revenue), and CGT will be payable on the sale of the property. You need to get tax advice. Most financial advisors won't be able to help, you need a specialist tax advisor.

    For government bonds, any stockbroker will be able to help you with these. There is no need to limit yourself to any particular country's bonds.


  • Registered Users Posts: 5,092 ✭✭✭ James Bond Junior


    McGaggs wrote: »
    It looks to me like you are still domiciled and ordinarily resident in Ireland. Irish tax is likely still due on the Irish rental income (if you're not using an agent, the tenant should be deducting 20% tax from the rent and paying it to revenue), and CGT will be payable on the sale of the property. You need to get tax advice. Most financial advisors won't be able to help, you need a specialist tax advisor.

    For government bonds, any stockbroker will be able to help you with these. There is no need to limit yourself to any particular country's bonds.

    My letting agent has refused to do this. I've been setting the 20% aside myself instead and my accountant will take care of it for me.


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