Against the background of a strong domestic economic recovery, we had Budget 2017. Unemployment rates have fallen from a peak of 15.2% to just 6.1% this year. Property prices continue to make a strong recovery, with residential prices up 12.3% year on year. Regardless of this strong recovery, our debt levels remain high. In the lead-up to this budget, the minister for Finance highlighted this. Despite falling in recent years, it’s still too high and needs to be reduced further. So, what did we get from Budget 2017 and what does it mean to you? Well, apart from tinkering with USC & Income Tax bands which won’t mean a lot to most, the following are some key points.
Property: On the plus side for property transactions, an amendment will be made to the 7-year CGT relief rule. This change will now allow owners to sell those qualifying assets between the 4th and 7th anniversaries and still enjoy a full exemption from CGT on any chargeable gains.
Stamp Duty however, on the purchase of Commercial Property has taken a huge hike from 2% up to 6%, effective immediately.
KEEP: Key Employee Engagement Programme. This is a share-based remuneration incentive for unquoted SME companies. It’s designed to enable these companies attract and retain key employees. The advantage to the employee is that these options will only be liable to CGT on disposal of the shares. There will be no liability to Income Tax, USC or PRSI. This scheme will be effective from 01st January 2018 to 31st December 2023.
AMRF: The €12,700 need to have an AMRF in the 1st place is now almost breached. The maximum contributory pension is being increased by €5 per week to €243.30 from March 2018. This will take the annual guaranteed pension up to €12,651. I’ve discussed AMRF’s in detail in another blog but pensioners will only need to bridge a very small gap now. Once the €12,700 requirement is met, there will be no compulsion for the AMRF (unless they change that figure at some stage in the future).
CAT: Capital Acquisition Tax Thresholds are to remain unchanged. With appreciating property values, this will bring a lot more people into the loop. This will be additionally significant for those with high net-worth estates or appreciating assets. I’ve discussed these taxes in a previous blog but the thresholds are:
Threshold Class Applies to, from Threshold Amount
A Parents to Children €310,000
B Other Blood Relatives €32,500
C All other €16,250
The CAT rate of 33% is also to remain unchanged. Thus, the tax payable on a gift or inheritance from a parent to a child is;
Inheritance Amount: Inheritance Tax Liability:
Greater than €1,000,000 Get spending, gifting or plan a talk with a CFP® today.
So, while the strong economic recovery is good on one side, it has created increased CAT liabilities on the other. Combine this with popular reliefs like the Dwelling House exemption which was previously significantly curtailed, means you could be liable to much higher inheritance tax liabilities.
Here at Lifestyle Financial Planners, we have cost-effective and tax-efficient ways to help reduce or eliminate this inheritance tax liability. So, get in touch today.
A Certified Financial Planner will be able to talk you through how changes in Budget 2017 may impact on your Life-Plan. To schedule your free Discovery Meeting consultation, contact Paul today at firstname.lastname@example.org
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Lifestyle Financial Planners offer tax-efficient, wealth management, retirement and estate planning solutions to our clients. Paul is a Certified Financial Planner CFP® and holds a Masters Degree from UCD in Financial Services and Risk Management.
Tel: 096-75951 Mob: 086-8053755, www.lifestylefinancialplanners.ie
The information contained in this article is for general information only. It should not be used as the basis for any form of agreement or advice. We recommend readers seek separate tax and legal advice where necessary. This information does not take into account your own particular circumstances. Errors & Omissions Accepted. Investment funds can fall as well as rise.
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