Retired and shares bought in crashing US market !

Hello,

I have just retired and bought 75K worth of shares in a raft of US companies listed on the NYSE through an online trading account and have some questions after the fact. (I know, not very smart).

1. What are my tax laibilities each year on the portfolio and how is it calculated, declared and paid to revenue?
2. With the markets crashing as we speak and the portfolio in the red is there any tax break/rebate incurred for losses taken during a given year?
3. I bought the shares on line with my own money being transferred from my current acc to the brokerage acc, was there a more efficient way to invest the money in the stock market since I am now retired and the primary aim was to grow the money more so for the future?
4. If I decide to transfer the portfolio to my children in the future what are the tax implications upon them and is there a way of minimising them?

tks,

dalyr2 said:

I have just retired and bought 75K worth of shares in a raft of US companies listed on the NYSE through an online trading account and have some questions after the fact. (I know, not very smart).

1. What are my tax laibilities each year on the portfolio and how is it calculated, declared and paid to revenue?

Click to expand...

You should make sure to file a US IRS W-8BEN form to avoid US witholding taxes if applicable. You are liable for income tax on any dividends paid each year. You are liable for CGT on any gains on disposing of shares. If you incur losses on disposing of shares you can offset these against subsequent gains. Revenue has a lot of info about CGT:

[broken link removed]

2. With the markets crashing as we speak and the portfolio in the red is there any tax break/rebate incurred for losses taken during a given year?

Click to expand...

If you dispose of shares and incur a loss you can offset these losses against subsequent capital gains that you make. There is no relief for "paper" losses - other than in restricted circumstances:

Getting CGT loss relief on unsold shares

3. I bought the shares on line with my own money being transferred from my current acc to the brokerage acc, was there a more efficient way to invest the money in the stock market since I am now retired and the primary aim was to grow the money more so for the future?

Click to expand...

A low charges unit linked fund may offer more diversity and ease of management although the total charges may be higher (?). See the key posts on direct versus indirect share investments. Do you now have any pension savings that you can roll into an ARF/AMRF and maybe benefit from tax relief etc.? Do you have any earned income at all? If you do and pay tax I wonder if you could open a PRSA? (I could be totally off the wall here!)

4. If I decide to transfer the portfolio to my children in the future what are the tax implications upon them and is there a way of minimising them?

Click to expand...

CGT, [broken link removed] and/or [broken link removed]. There are several existing threads on the tax implications of gifting assets in this way which are worth searching for and reading.

Perhaps you need independent professional financial advice on what is best for your situation in terms of investment advice, tax/inheritance planning etc.?

I'm not sure that the W8 form will eliminate your liability to Dividend witholding tax in the USA completely. My understanding is the your liability is 15% if you complete this form and 30% if you don't.

We have a double taxation agreement with the USA so your 15% deduction can be set off against your Irish tax liability (either 20% or 41% depending on your bracket).

If you sell the shares the capital losses can only be set against other capaital gains in the same tax year. You cannot carry them forward.

Labguy said:

I'm not sure that the W8 form will eliminate your liability to Dividend witholding tax in the USA completely.

Click to expand...

Sorry - it may not eliminate all US tax liabilities but anybody who is non resident should fill one in to avoid unnecessary deductions.

If you sell the shares the capital losses can only be set against other capaital gains in the same tax year. You cannot carry them forward.

Click to expand...

This is incorrect. You can carry losses forward indefinitely. And then you must set them against subsequent gains before you use your annual CGT allowance.

ClubMan said:

This is incorrect. You can carry losses forward indefinitely. And then you must set them against subsequent gains before you use your annual CGT allowance.

Click to expand...

We may be at cross purposes here - what I am saying is that you cannot sell and incur losses in one year and then take advantage of that loss to reduce a sell gain in some ensuing year.

Eg. You sell and lose €10,000 in 2008. You sell and gain €11,000 in 2009. The loss in 2008 has no effect on the CGT liability in 2009

Labguy said:

We may be at cross purposes here - what I am saying is that you cannot sell and incur losses in one year and then take advantage of that loss to reduce a sell gain in some ensuing year.

Click to expand...

You are wrong. You can do this under Irish CGT rules. Capital losses can be carried forward indefinitely and offset against subsequent capital gains in the same or future years.

ClubMan said:

You are wrong. You can do this under Irish CGT rules. Capital losses can be carried forward indefinitely and offset against subsequent capital gains in the same or future years.

Click to expand...

Indeed you're correct Clubman - my apologies!

The relevant Revenue section is given below:

"6. Losses
Where there is a loss on a disposal it will normally be allowable if a gain on the same transaction would have been chargeable.
Allowable losses are set against the chargeable gains of the same year and if the losses exceed the gains, the excess may be carried forward against gains of later years. Special provisions apply to losses on certain disposals, for example shares sold within four weeks of acquisition and deveopment land. "