Blog – McCarthy & Associates – Galway Talks, 16/10/2014

Euro notesIssue:  Budget 2015

Comment:  I would like to comment on some of the following issues in the recent budget announcement:-

Pension Levy

As we all know there was a ‘smash and grab’ raid on people’s pensions in the private sector some years ago, through the pension levy.  There is no doubt that if this had been on people’s savings there would have been civil unrest over it.  Unfortunately from a psychological point of view, a lot of people feel that their pensions are removed from them, which is obviously not the case.  The Minister announced that the “hated” levy will be abolished from the end of 2015 and whilst this is a welcome development it has been an extremely costly one for those in the private sector and hopefully we will never see anything of this sort ever again.

DIRT Refund – First-Time Buyers

This is what I would have to call the most embarrassing and idiotic announcement, I have ever seen from a Minister of Finance.  He stated that first-time buyers, who were saving for a period of 2 years to raise the 20% deposit, necessary to buy a home, will be able to apply for the refund of any DIRT paid.  Whilst this obviously sounds like a welcome development, in practical terms it will amount to no more than €150 at most. This obviously is going to do nothing to help them improve their financial position to purchase a home.  My greatest concern is that, by referring to this matter, the Minister appears to be, confirming his approval of the Central Bank’s recent announcement.

Tax Relief extended to landlords

In last years budget a new tax relief scheme for owner occupiers to improve their home was announced.  This has now been extended to landlords and obviously will be a welcome assistance for those looking to upgrade their properties and hopefully will help improve the standard throughout the rental market.

Rent a Room Scheme increases to €12,000

One of the lesser publicized measures introduced, is the increase in the tax free rent a room scheme to €12,000.  For hard pressed homeowners who are renting a room or two in their house this is a welcome development as they will be able to earn up to €1,000 per month without any tax liability.

Issue:  Recent figures shows that intense competition in the mortgage market is affecting AIB and Bank of Ireland.

Comment:  Recent figures suggest that AIB and Bank of Ireland are experiencing stiff competition from other smaller lenders such as KBC etc.  They are definitely loosing market share and this may cause them to lower their variable rates, however this remains to be seen.

There is no doubt that any market competition which reduces the dominance of these two banks has to beneficial for the consumer.