Moneymakeover Maximising tax-efficiency

W

Windsor23

Registered User
Messages
41
Age: 51
Spouse’s/Partner's age: 52
Number and age of children: 1 @ 13yrs - with disability so long-term dependent

Income and expenditure: Self-employed company directors
Me: €70k (inc €50k tax exempt) Spouse: €60k (inc €50k tax exempt)

Type of employment: Both self-employed limited company directors
Pension fund: €60k x 2. PRSAs started 3 years ago - didn't prioritise because we get v little tax relief.

Family home: €1.75m with a €400k mortgage - repayments €2.5k pm
Lender: AIB Interest rate: 3.4%
If fixed, what is the term remaining of the fixed rate? 2 yrs

Other borrowings – car loans/personal loans etc None
Do you pay off your full credit card balance each month? Yes
If not, what is the balance on your credit card? Nil
Do you have a pension scheme? Small, as above

Savings:

50k current account (emergency fund)
Etoro 10k - a few mixed stocks.
Revolut 40k - 5 major tech stocks
Bitcoin 1.7k
115k VWCE ETF
Physical gold 60k - (bought a long time ago)

Do you own any investment or other property? Yes, 50% of renovated property just on market @ €1m (Initial capital investment in this was 250k a year ago)

Other information which might be relevant:
Life Assurance - €250k
Mortgage protection insurance €450k decreasing term

Capital Loss carried forward 200k

Planning to contribute 25k per year into pension from now on, purely for compounding over the next 15 years or so, despite little initial tax benefit.

Mostly wondering how to deal with the anticipated development profits - this is also part of a limited company of which only one of us is a director - this company will continue trading and each director will reinvest 50% of the profits. Wondering whether it's possible to put after-tax profit into pension also, but uncertain whether the PRSA is 'attached' to our other business and we can only fund via that?

Be also good to utiilise the capital loss at some point, but since the property will be salary/dividend income it attracts different tax treatment afaik.

Grateful for any thoughts or insight. We know we're not great pensions-wise because of our exemption status but getting ready to change that now.
 
Despite your high income, I think you are in a precarious position financially.

Your net wealth consists of:
- €120k in pensions
- €1.625m everything else

If you used all of your available cash/shares today to clear your mortgage, you would still have a mortgage of €125k to clear. Way too much of your wealth is in your PPR.

Windsor23 said:
Family home: €1.75m with a €400k mortgage - repayments €2.5k pm
Click to expand...
Windsor23 said:
Planning to contribute 25k per year into pension from now on, purely for compounding over the next 15 years or so, despite little initial tax benefit.
Click to expand...
Your mortgage, based on the figures above runs to 70. Your comfortable retirement also depends on both of you maintaining your current high earnings all the way to your late 60's.

You then have the added complication of supporting your child into adulthood.

Personally I think selling your home needs to be on the table

If you haven't already done so, I think it is also essential that you have your wills up to date. If anything happens to either/both of you:
- do you have guardians for your child
- can your child manage money or does it need to be held in trust for them (when they are an adult)
- do you need to specify the PPR be sold and more suitable accommodation purchased for your child.
 
_OkGo_ said:
Personally I think selling your home needs to be on the table
Click to expand...
We've just bought it after years of careful saving and planning so definitely not an option! :) It's specific to our child's needs and located close to facilities/public transport etc to help enable autonomy for them down the line, which is important and a different kind of 'wealth' for us all. We could pay off the mortgage with additional business cash if needs be, but don't want to at this point and have no plans to stop working either unless we are forced to.

But now that we've done as best we can with regard to our child's circumstances, are slowly turning the focus to our own futures. Liquidity is important for a few different reasons, so locking up cash in pensions - particuarly without the benefit of tax relief going in - just wasn't a priority before now. And as your rightly point out, since much of our wealth is now locked up in our home, we're turning our attentions to the pensions deficit while also keeping personal investments to hand, as a way to ensure we're not too constrained all round.
 
You didn’t buy a €1.75m PPR and half of a €1m investment property off €70k and 60k salaries, so it feels to me that your business either generates significantly more cash/profit than the salaries you’re taking or it’s a significant saleable asset in its own right? If so, should probably be listed as such to give the full picture.
 
  • Like
Reactions: KOW
You must log in or register to reply here.
Back
Top