Great episode Chris and Jim, thanks for it! Can I just ask about something Jim mentioned, that it is good that house prices may be coming down in Ireland. But if we are already facing a housing shortage, wouldn’t that discourage developers from new investment? I wonder what your view is on that? Thanks!
Yes, all other things being equal, lower house prices, if they include lower house prices for new homes, may deter some housebuilding. but other things are rarely equal. Perhaps new house prices attract a bigger premium. Perhaps land prices start to edge down, which will encourage builders to get rid of some of their land banks - build houses on the land rather than horde the land.
Can you please help me understand why index funds, etfs etc are taxed differently to shares in Ireland (including taxing unrealised gains). Is this likely to change any time in the future? Seems very unfair for the average investor, especially when compared with other countries
Thanks for your kind words and for sharing - it helps us a lot.
I’m no great tax expert but I think it’s because the revenue see dividends from shares taxed on distribution (when they are paid out to you) but they are rolled up, tax free, within an index fund. Then, when a taxable event occurs, capital gains tax is payable as with shares but the Revenue want to get their dividend taxes. A taxable event is usually when the index fund or ETF is sold or after 8 (I think) years of ownership. Hope I got that right.
Thank you. In Ireland etfs / index funds they are taxed at 41% cgt on a sale but individual shares are taxed at 33%. You are correct re 8 years - Taxing of unrealised gains. Not sure how many other countries in the world do this!
That’s my understanding too, albeit I’m not a tax expert either. DWT is 25% and then net of DWT the dividend is taxable as income, which for most with shares will be 40%. Whereas disposing of individual shares is CGT at 33%. So if you have a portfolio of dividend yielding shares and selling down shares you get hit with roughly 41% on average, so the revenue probably reckon 41% for an ETF is about the average of dividend and capital gains within the fund. Best guess.
https://www.afr.com/podcast/thefin
The latest podcast above is a good listen with The Australian housing 'crisis' in mind. @JimPower
Great episode Chris and Jim, thanks for it! Can I just ask about something Jim mentioned, that it is good that house prices may be coming down in Ireland. But if we are already facing a housing shortage, wouldn’t that discourage developers from new investment? I wonder what your view is on that? Thanks!
Yes, all other things being equal, lower house prices, if they include lower house prices for new homes, may deter some housebuilding. but other things are rarely equal. Perhaps new house prices attract a bigger premium. Perhaps land prices start to edge down, which will encourage builders to get rid of some of their land banks - build houses on the land rather than horde the land.
Hi chaps, great pod. I have shared far and wide.
Can you please help me understand why index funds, etfs etc are taxed differently to shares in Ireland (including taxing unrealised gains). Is this likely to change any time in the future? Seems very unfair for the average investor, especially when compared with other countries
Thanks for your kind words and for sharing - it helps us a lot.
I’m no great tax expert but I think it’s because the revenue see dividends from shares taxed on distribution (when they are paid out to you) but they are rolled up, tax free, within an index fund. Then, when a taxable event occurs, capital gains tax is payable as with shares but the Revenue want to get their dividend taxes. A taxable event is usually when the index fund or ETF is sold or after 8 (I think) years of ownership. Hope I got that right.
Thank you. In Ireland etfs / index funds they are taxed at 41% cgt on a sale but individual shares are taxed at 33%. You are correct re 8 years - Taxing of unrealised gains. Not sure how many other countries in the world do this!
That’s my understanding too, albeit I’m not a tax expert either. DWT is 25% and then net of DWT the dividend is taxable as income, which for most with shares will be 40%. Whereas disposing of individual shares is CGT at 33%. So if you have a portfolio of dividend yielding shares and selling down shares you get hit with roughly 41% on average, so the revenue probably reckon 41% for an ETF is about the average of dividend and capital gains within the fund. Best guess.
We may as well invest in Brkb :)