Another ETF tax question!

G

GoaterHell

Guest
I must say, the revenue information in this area seems to be so basic. Anyone trying to do anything other than buy and hold might as well forget about it. Anyway, does anyone have any idea how this situation might be treated

I am interested in purchasing an ETF, as opposed to a managed fund, however I have a question relating to Tax. My understanding is that the ETFs cannot be included as part of CGT tax exemption or any gains/losses in other assets taken into consideration.

My question therefore is

If I was to invest in the ISEQ ETF and it fell in value over the next 6 months by say 10%, then I decided to sell, accepting a 10% loss. If I subsequently bought again a month later, at an even lower price, say 20% off my initial price and saw a gain of 10% in 4 months at which point I sold again, would I still be taxed on the second profit as if it was pure profit or would the fact that 11 months on I am right back where I started mean that I had no tax liability?

I know it is a confusing one, so thanks for any insight you can give me.
 
Similarly, if I Put €5k each into two ETFs and after 6 months one of them is up by €1k and one of them is down by €1k. If I decide to cash them both in, am I liable to tax on the €1k?

If so, this would seem to be a very good reason not to use ETFs for diversifying.
 
I'm no expert but since no one else has answered...

My understanding is that EFTs which you purchase can't have losses offset against each other. So the situation is exactly as you describe... that is the situation which you describe but find it hard to believe is true!

The only exception to this would be funds purchased inside an umbrella policy with say New Ireland or Quinn. However I don't know if you would really call those funds EFTs.

So, you are right that EFTs have tax disadvantages compared with buying stocks yourself, but obviously they have a convenience factor.

Ix.
 
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