Q What do you think of cryptocurrencies? And if I make a profit buying and selling cryptocurrencies, what are the tax implications?
AN Cryptocurrencies aren’t currencies at all, according to Frank Conway, founder of financial wellness provider MoneyWhizz and a qualified financial advisor. He says they are high risk investments.
The definition of currency is that they must meet three basic tests: unit of account, store of value, and medium of exchange. Cryptocurrencies do not meet all three, he says. Cryptocurrencies are unregulated and, if you take the best-known, Bitcoin, how they originate is mysterious and, from an environmental perspective, devastating, says Conway.
In essence, it’s a really expensive “mining” process using blockchain. Blockchain is a growing list of records, called blocks, that are linked using cryptography. He said that, as with all high-risk investments, you must take into account the possibility of total loss of the capital invested.
As for taxes, the capital gains tax is applied at 33%. Mr. Conway said it was curious from an Irish tax perspective that the tax on high-risk cryptocurrency trading gains is lower than the exit tax on managed funds, which still sits at 41 per cent. He said that cryptocurrencies are an area that requires closer scrutiny and reform, especially now that more people will need to consider investing as a way to limit the impact of inflation.
Q Like many workers, I had to switch to remote work last year. We renovated part of our living room and a small bedroom into a functional office space. Is there any financial support we can retroactively claim to help with the cost? It seems like there should be, as we wouldn’t have had to do this if it wasn’t for the pandemic.
AN The Home Renovation Incentive (HRI) scheme used to cover these kinds of home improvements, according to Taxback.com consumer tax manager Marian Ryan. She says she allowed homeowners, as well as landlords and local authority tenants, to claim relief for renovations or improvement work done on their main home or rental property, above a qualifying amount. However, the scheme ended in 2018 and no claims are allowed for any work done or paid for after 31 December 2018. Ms Ryan says other home-focused grants predominantly support home modernization to increase BER. building energy) and energy. efficiency. In addition, a new subsidy has recently been announced to support the adaptation of housing for the elderly and disabled. However, these do not cover the types of jobs that many households across the country have had to take on in response to having to work remotely. Ms. Ryan would like to see the reintroduction of the HRI so that workers can take advantage of this valuable tax break. Those who have made renovations, repairs or improvements to their home up to the 2018 cut-off point can still claim a tax refund on qualifying expenses, if they haven’t already.
Q After many virtual home visits, my husband and I are in the process of purchasing our first home. I thought we should get a joint life mortgage protection policy. However, our financial broker recommends configuring our policy on a double life basis. I’m worried about how much more it might cost. Our broker says that he offers more protection, but is it worth it?
AN Traditionally, there was only one way to set up partner mortgage protection: a joint life, says Sara Murphy of protection company Royal London. It would cover both people on the mortgage and if one person died, they would pay the policy amount and the policy would end. However, as her broker recommended, it’s also possible to set up your mortgage protection as a double life policy. It also covers both people on the mortgage, but the key difference is that the policy would pay for each death regardless of whether they occur at the same time, she says. The good news is that this option does not have to cost you more. She said that Royal London offers dual life mortgage protection for the same premium as joint life coverage. She makes a note to review her mortgage protection coverage again in a few years. There is a competitive market among providers at the moment, so there may be scope for you to take advantage of cheaper premiums. But you’ll never know unless you check it out, Murphy said.
