Please send your queries to Dominic Coyle, Q&A, The Irish Times, 11-15 D'Olier Street, Dublin 2, or e-mail to dcoyle@irish-times.ie. This column is a reader service and is not intended to replace professional advice. Due to the volume of mail, there may be a delay in answering queries. All suitable queries will be answered through the columns of the newspaper. No personal correspondence will be entered into.

Housing

I am currently purchasing a newly-built house. I have owned a house before. I cannot move into it straight away and intend letting it out for a while. What are the tax implications of this? I am working and am in the higher tax bracket. What can I put against the rental income? Can I offset my current rent?

Mr P.P., e-mail

Well, the first-time buyer's grant is out for starters as you have previously owned a home, regardless of whether you were occupying this house yourself or renting it. Similarly, you will be liable for stamp duty, although you probably know that already.

More importantly, given that you are renting out the property, you will not be able to claim mortgage interest relief. This relief is only available on principal private residences - properties that are occupied by the owner(s).

As you are aware, you will pay tax on your rental income at your marginal - or higher - rate. In terms of what you can offset against that rental income before calculating the tax bill, the one certainty is that you cannot offset the rent you are currently paying for another property. What you can do, assuming you are renting in the private sector, is claim tax relief on that rent of £750 per person per annum, assuming you are not widowed and are under 55. Widow(er)s can claim 50 per cent extra and the over-55s more again. You will need to fill out a RENT 1 form which will be available from your local tax office.

What you can offset against the rental income of your new property are the costs involved in letting it:

fees, such as those of a letting agent;

costs including, for instance, local waste charges and insurance;

maintenance and repair;

fixtures and fittings, which are set against income over a seven-ear period.

Shares

Shares held in one name are subject to capital gains tax (CGT) on profits exceeding £1,000 on disposal whereas, if the same shares were held in joint names of husband and wife, CGT would only apply after profits exceeded £2,000. If this is correct, is it possible to change registered shares from one name to joint names and how does one go about doing this?

Mr W.R., e-mail

The situation with capital gains and shares is very simple. Each and every one of us has an annual capital gains tax-free allowance of £1,000, as you say. This means that the first £1,000 of profit on shares sold - after expenses and indexation - in any given year is free of tax. This allowance is not transferable.

If two people own the shares jointly, they still each have the £1,000 allowance but, by inference, the allowance goes further because they split the profit on each share sold. Thus, while they only have a non-transferable allowance of £1,000, the effect is the same as if they shared an allowance of £2,000.

The situation is broadly the same for joint owners who are married couples. The one advantage is that, in the same way as the transfer of other assets between spouses, there is no tax on moving the shares from one name into that of both spouses.

In the case of such a transfer between people other than spouses, the transaction would be seen as a trade and would attract stamp duty at 1 per cent on the value of the shares transferred at the time of the transfer.

Going about transferring the shares from the name of one spouse to both is simple and does not require a stockbroker. You simply get a form from Dublin Castle, fill it in and return it.

The one thing you do need to be aware of is that, should either spouse die, their half-holding of the shares will be deemed part of their estate and will not necessarily revert to the spouse.

Bacon report

I have a house that is rented. It has been rented pre-Bacon report I - i.e. I can offset mortgage interest against my rent. If I were to take up residence in the house, and subsequently rent it in the future again, would this status still apply (i.e. when I rent it for the second time that I could offset the mortgage interest against the rent)?

Mr C.Q., e-mail

As you say, the owner of any property which was rented prior to the first Bacon report remains eligible for mortgage interest relief, while those which were rented subsequent to that first report on the housing situation do not benefit from such relief.

However, it appears that people in such a position lose that relief if they subsequently occupy the premises themselves as a principal private residence. While, they will, of course, be able to claim the mortgage interest relief as owner-occupiers, they will not, it appears, be able to continue to claim the relief if they decide subsequently to relet the premises.

I bought a flat in London in February 1999, which I lived in until I moved back to Ireland this June. The flat is now let out in London as I have not decided if I will return to the UK or not.

In the UK, I could write off the interest on my mortgage against tax. However, I have got confusing reports since moving home. What is the situation regarding property owned abroad? Is it liable for Irish or UK tax and, if Irish tax, then am I subject to the Bacon report which states that mortgage interest on a property bought recently is not allowable against tax. Also, how is the currency difference taken into account when filing tax returns?

Ms. G.C., e-mail

If you are Irish and resident in Ireland, you are taxable here on your worldwide income and that would include any income from your property in Britain. If the British authorities were to tax you on rental income, you would have that tax offset against your Irish tax bill under the double taxation agreement in place between the two states.

In relation to Bacon, mortgage interest relief is not allowed on property purchased abroad after May 2nd, 1998. It would appear this applies to your situation.

On currency, the Revenue will, I understand, convert currencies at the prevailing rate at the time of the return.