Experienced property investor, but virgin stock market trader.

[Sarenco]

Hi Landlord

If your total borrowings exceed your total cash reserves, then you are investing in property and equities on a leveraged basis. Nothing wrong with that per se but, particularly if done to excess, you could find yourself in a world of pain if circumstances change.

Don't forget that current rents and interest rates are far from guaranteed.

If you are absolutely determined to invest in equities (outside of a pension wrapper) before paying down your borrowings then you might take a look at some UK income investment trusts (City of London, Bankers Trust, etc.) , which look like relatively good value to me at the moment.

 

[ronaldo]

With six rental properties, the OP has a low-risk portfolio because the rental income is likely to cover the mortgage repayments at ECB + 0.75% interest, even if one or two properties are empty.

Therefore, the biggest risk here is that 3+ properties sit empty for an extended period of time - how likely is this in Dublin?

A less likely risk is that rent falls, or the ECB interest rate increases, to a level that results in the rental income not meeting the mortgage repayments - how likely is this when on such a great tracker rate? The OP has the figures available to him/her to be able to figure out how high the ECB rate would need to rise, or rents would need to fall, for this to happen.

The third, least likely, risk is that the properties are worth less than today's value in 17 years time when the OPS interest-only mortgage deals end.

So the question is - are the three risks identified above so great that the OP should consider liquidating part of his portfolio resulting in immediate losses - I don't think so.

Of course, the OP could also simply pay down some mortgage capital - but on such a tracker rates, I personally wouldn't. I would do as the OP intends and invest a lump sum in the stockmarket followed by regular future investments. This approach is highly likely to result in higher returns than paying down mortgages secured at such low rates.

Many will disagree with my thoughts but that's because most peoples risk tolerance is lower than mine and, likely, the OPs.

 

[Gordon Gekko]

The OP is funded at ECB +0.75% and will be long real assets in a world where there's QE.

Not a bad position.

BTW US ETFs are treated like shares for tax purposes. Maybe look at some kind of Dividend Aristocrats ETF or Global Brands ETF.

 

[Sarenco]

You should be very familiar with US estate tax, withholding tax on dividends and FATCA compliance before investing a substantial sum in a US domiciled ETF. You might cure an Irish tax problem only to give up all your gains to Uncle Sam!

 

[Gordon Gekko]

You should be very familiar with US estate tax, withholding tax on dividends and FATCA compliance before investing a substantial sum in a US domiciled ETF. You might cure an Irish tax problem only to give up all your gains to Uncle Sam!

Not if you purchase through an Irish broker.

In practice, no US estate tax is collected. Withholding at 15% arises and is available as a credit against the higher Irish rate of tax. And FATCA is of no relevance.

 

[RichInSpirit]

Open a spread betting account and forget about tax!

 

[Sarenco]

Not if you purchase through an Irish broker.

In practice, no US estate tax is collected. Withholding at 15% arises and is available as a credit against the higher Irish rate of tax. And FATCA is of no relevance.

Well, US estate tax applies to transfers between spouses on death if you hold more than $60k in US equities and there is no credit against Irish CAT. 15% is the correct withholding rate if you have made the appropriate US filings. FATCA certainly becomes relevant if your paperwork is not in order!

 

[Gordon Gekko]

Well, US estate tax applies to transfers between spouses on death if you hold more than $60k in US equities and there is no credit against Irish CAT. 15% is the correct withholding rate if you have made the appropriate US filings. FATCA certainly becomes relevant if your paperwork is not in order!

None of the above is correct.

- US estate tax does not arise in such circumstances. The deceased spouse would have to be a US citizen in order for the $60k pitfall to be relevant. And even then, if the shares are held through an Irish broker, the tax is never collected.

- Any Irish broker will arrange for you to avail of the 15% rate.

- Any Irish broker will deal with the FATCA side of things (which is virtually non existent for an Irish person).

 

[Sarenco]

None of the above is correct.

- US estate tax does not arise in such circumstances. The deceased spouse would have to be a US citizen in order for the $60k pitfall to be relevant. And even then, if the shares are held through an Irish broker, the tax is never collected.

- Any Irish broker will arrange for you to avail of the 15% rate.

- Any Irish broker will deal with the FATCA side of things (which is virtually non existent for an Irish person).

No, with certain exceptions US estate tax applies to non-US citizens and non-US residents as regards any US assets (including securities issued by US companies) and appropriate filings must be made where assets have a value in excess of $60,000.

Here's a link to an IRS note on the subject:

[broken link removed]

I didn't say that an agent couldn't look after US filings on your behalf but they still need to be addressed. Irish brokers are rarely regarded as being inexpensive and you need to be confident that they have the necessary expertise to make the necessary US filings and that these are actually completed.

 

[Gordon Gekko]

Well, US estate tax applies to transfers between spouses on death if you hold more than $60k in US equities

That isn't what you said (see above). The statement is incorrect. US estate tax only arises in such circumstances if the deceased spouse is a US citizen.

No, with certain exceptions US estate tax applies to non-US citizens and non-US residents as regards any US assets (including securities issued by US companies) and appropriate filings must be made where assets have a value in excess of $60,000.

I didn't say that an agent couldn't look after US filings on your behalf but they still need to be addressed. Irish brokers are rarely regarded as being inexpensive and you need to be confident that they have the necessary expertise to make the necessary US filings and that these are actually completed.

Irish brokers don't take care of the US filings. Nothing gets filed. No tax is paid even though a liability can exist, and the US do nothing to chase the tax. Any obligation is the investor's. The US have no visibility on gifts or inheritances of shares as all that's visible on the US side is a change of legal ownership (e.g. Private Bank Nominee 1234 to Private Bank Nominee 5678).

 

[Sarenco]

I'm not following you - are you saying that a US estate tax liability doesn't arise for non-US citizens or are you saying that a liability does arise but can be evaded?

The first $60k of US assets are exempt from US estate tax for non-resident aliens so I don't see any inconsistencies between my statements but you might clarify.

Can you explain to us how an Irish broker can arrange for a 15% withholding without filing the appropriate paperwork?

 

[Gordon Gekko]

I'm not following you - are you saying that a US estate tax liability doesn't arise for non-US citizens or are you saying that a liability does arise but can be evaded?

The first $60k of US assets are exempt from US estate tax for non-resident aliens so I don't see any inconsistencies between my statements but you might clarify.

Can you explain to us how an Irish broker can arrange for a 15% withholding without filing the appropriate paperwork?

You said that "US estate tax applies to transfers between spouses on death if you hold more than $60k in US equities". That is incorrect and it's the third time that I've quoted it.

Most Irish brokers have QI status with the US which enables the treaty rate of 15% to be applied at source. That's standard stuff.

A liability can arise and does arise but nobody pays it and the IRS don't chase it. So yes - Widespread evasion on a worldwide basis.

 

[landlord]

Hey guys......
Remember me?.......?......the OP and my original post ! You seem to be going off on a tangent there!
Coincidently I also hold US citizenship, but am now even more confused about whether I can trade in U.S. stocks through say TD Waterhouse, without any tax issues.

 

[ken]

Hey guys......
Remember me?.......?......the OP and my original post ! You seem to be going off on a tangent there!
Coincidently I also hold US citizenship, but am now even more confused about whether I can trade in U.S. stocks through say TD Waterhouse, without any tax issues.

HI Landlord confusion oh yes ..on stocks etc and what to invest in i'm also a landlord with an interest in stocks etc .....well here is another option for you to consider ....not from me but direct from Ray Dalio no less ..and with us citizenship this shouldn't be an issue...consider no more than 7.5% of your fund into gold ..7.5% into commodities 15% intermediate us bonds 40% long term us bonds 30% in stocks readjust yearly ...ok landlord ..love to hear the feedback and all the opinions on this from the guys on here

 

[Sarenco]

You said that "US estate tax applies to transfers between spouses on death if you hold more than $60k in US equities". That is incorrect and it's the third time that I've quoted it.

Most Irish brokers have QI status with the US which enables the treaty rate of 15% to be applied at source. That's standard stuff.

A liability can arise and does arise but nobody pays it and the IRS don't chase it. So yes - Widespread evasion on a worldwide basis.

Yes, you have said repeatedly, without explanation, that what I have said is incorrect and have then gone on to say that a liability does arise - hence the confusion.

Yes, I am aware of the fact that most Irish brokers (not sure about TD Waterhouse) have QI status whereby they act as withholding agent for the IRS.

 

[Jim2007]

No, with certain exceptions US estate tax applies to non-US citizens and non-US residents as regards any US assets (including securities issued by US companies.........

From a practical point of view this tax law is unenforceable unless of course you request the share certificates to be issued in your name. Millions and millions of U.S. shares are traded every day in nominee accounts and the IRS have no idea who owns the shares.

Even FACTA for the most part can be ignored if the broker has no desire to operate a business in the U.S. nor do business with U.S citizens or Green card holders.

The only thing you need to deal with is reclaiming the 15% retention tax that is applied to dividends and similar distributions and this is between you and the Irish revenue authorities, nothing to do with the IRS.

 

[Sarenco]

Hey guys......
Remember me?.......?......the OP and my original post ! You seem to be going off on a tangent there!
Coincidently I also hold US citizenship, but am now even more confused about whether I can trade in U.S. stocks through say TD Waterhouse, without any tax issues.

Hi Landlord

Yes, apologies for the off-topic discussion.

In my opinion, investment trusts offer the best compromise for Irish stock investors in terms of achieving diversification at a reasonable cost and relative simplicity from a tax perspective outside of a pension wrapper. Dividends are subject to income tax and gains are subject to CGT with loss relief, etc.

Unfortunately you will have currency conversion costs and stamp duty (0.5%) in addition to your broker's commission.

You will obviously need to do your own research but here are some sample portfolios to get you started:

http://www.johnbaronportfolios.co.uk/

Alternatively, you might consider investing in a global investment trust such as Foreign and Colonial Investment Trust plc (FRCL) as a core holding and then adding to it as you see fit.

Good luck.

 

[Sarenco]

From a practical point of view this tax law is unenforceable unless of course you request the share certificates to be issued in your name. Millions and millions of U.S. shares are traded every day in nominee accounts and the IRS have no idea who owns the shares.

Understood but there will obviously be a change in beneficial ownership (and presumably a new W-8BEN required) on the death of the shareholder. I suspect the fact that the OP holds US citizenship also complicates matters.

 

[Jim2007]

Hey guys......
Remember me?.......?......the OP and my original post ! You seem to be going off on a tangent there!
Coincidently I also hold US citizenship, but am now even more confused about whether I can trade in U.S. stocks through say TD Waterhouse, without any tax issues.

Yes OP this is bad news because it means you will have tax issues. In opening an account with most on line brokers you will be required to declare your U.S. citizenship which at a minimum will result in additional paper work and depending on your circumstances may give rise to a U.S. tax liability. Do you already submit an annual U.S. tax return?

In addition to restrictions on share dealing, you should be aware that at some financial products offered for sale to EU citizens across Europe can not be held by U.S. citizens. Most often those products are domiciled in Luxembourg, Lichtenstein, Switzerland or Ireland. So read the small print.

 

[Gordon Gekko]

Yes, you have said repeatedly, without explanation, that what I have said is incorrect and have then gone on to say that a liability does arise - hence the confusion.

Yes, I am aware of the fact that most Irish brokers (not sure about TD Waterhouse) have QI status whereby they act as withholding agent for the IRS.

Sarenco, are you deliberately missing the point? Your statement regarding spouses was blanket when in fact it's only an issue between a US citizen spouse and a non US citizen spouse.