Your Questions: Is it safe to opt for the new mortgage lender offering low rates?

The lender offering these rates, Avant Money, has been operating in Ireland under the name Avantcard for a number of years. (Stock image)

Charlie Weston Twitter Email

November 14 2020 02:30 AM

Q. I have seen that there is a new European lender offering low rates entering the Irish market. I would like to check it out but am slightly nervous because I have never heard of them. Is it safe?

A. Absolutely, is the answer from head of credit at MyMortgages.ie Joey Sheahan. The lender offering these rates, Avant Money, has been operating in Ireland under the name Avantcard for a number of years. Avantcard offers personal loans and credit cards and has done for over 20 years, he said.

Avant Money’s parent, which is essentially where the lender receives its funding from, is Bankinter. It is the fifth largest Spanish bank. Bankinter is a banking giant worth €3.2bn and has been in business for more than 50 years. It is a long-established household name in Spain, Portugal and Luxembourg. Just because Avant Money is not an Irish-owned lender does not mean it carries any greater degree of risk, Mr Sheahan said.

Also, you need not be concerned that you will be dealing with an overseas entity – the company is headquartered in Carrick-on-Shannon, Co Leitrim, with a second office in Dublin, he added. All lenders in the Irish mortgage market are regulated by the Central Bank of Ireland. Your primary consideration is really which lender will offer you the best terms based on your specific circumstances, he said.

Q. Are there any income tax or legal considerations in the following scenario? A brother gifts €32,000 euro to a sibling. Over a number of years the sibling gifts by monthly payments a similar sum to a nephew, the brother’s son.

A. The sibling can claim a small gift exemption of €3,000 without having to pay any gift tax, or Capital Acquisitions Tax (CAT). This means he can deduct this from the €32,000, according to Susan Murphy of MakeMyWill.ie. He also has a gift/inheritance tax-free threshold of €32,500, so the gift from the brother should be tax-free, she added.

This is provided the sibling has not received previous gifts or inheritances from someone in the same tax threshold since December 1991. Ms Murphy said this was group threshold B, which applies to gifts/inheritances from aunts, uncles, grandparents, siblings. If he has, the prior gift/inheritance is also taken into account. If the total amount (less the €3,000 small gift exemption) comes to over €32,500, the excess is taxed at 33pc.

The regular gifts to the nephew are separate to the gift to the sibling. He is a different beneficiary. The nephew can claim the small gift exemption of €3,000 a year without having to pay any gift tax, and he also has the tax-free threshold of €32,500. If the gifts to the nephew are regular gifts over a number of years, it is likely he won’t have a gift tax liability either, the boss of MakeMyWill.ie added.

Q. We are a retired couple, aged 68 and 74. We are living on one full State seniors pension plus half of an old age pension of approximately €370 weekly. Also, one of us have a private work pension of €270 per week. We also have an income of €950.00 per month rent from a one-bed apartment attached to the side of our house. As pensioners over 66, we wish to know how much we are allowed to earn tax-free from rental income. As far as we understand we are under the threshold for being taxed.

A. As the apartment is attached to the side of the house and because the total annual rent is below €14,000, the rental income of €950 would qualify for rent-a-room relief, according to the consumer tax manager at Taxback.com, Marian Ryan. She said you qualify as you are in receipt of €11,400 rental income and the threshold for rent-a-room relief is €14,000.

So, even if the rent increased by €2,600, you would still qualify for rent-a-room relief. In relation to tax, assuming that spouse one is in receipt of the full State pension and the private pension and spouse two is in receipt of the a half State pension payment, it would appear that there would not be any PAYE due, as their tax credits – including age tax credits – would cover any tax due, she said.

As both spouses are over 66 years of age, neither would be subject to PRSI. Ms Ryan estimates that spouse one may have a USC payment due of approximately €204.26 for 2020. However, it is highly likely that USC is being deducted at source from the private pension which may cover some, if not all, of the USC due for the year. As spouse two’s income is below €13,000, they would be exempt from USC.

Need to Know: All lenders in the Irish mortgage market are regulated by the Central Bank of Ireland. Your primary consideration is which lender offers the best terms.

Need to know: Siblings can claim a small gift exemption of €3,000 without having to pay any gift tax, or Capital Acquisitions Tax (CAT).