Relative's foreign share sale

shipship

Registered User
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Hi I've been asked for advice from a relative, and I just want to double-check things with people here.

They sold some US-based shares last year.
They sold more shares than they wanted to (they hadn't checked the share price before they sold)
They want to buy back some of the shares (which have risen about 30% since they sold them)
The total gains are in the region of 20k
They had these shares for a long period (possibly before 2003 so may be eligible for Indexation Relief)
They don't know anything about CGT


Do I have to deliver the bad news that they owe roughly 6k in CGT? Is there any additional allowances for OAPS, or people who have no PAYE income?

Would I be correct in thinking that if they want to buy back some of the shares, they first have to pay CGT? It can't be a case of not realising that gain?
 
Yes they liable for CGT
Capital gain = 20k and indexation allowed if purchased before 2003
less annual allowance 1,270 - if held alone or 2 x 1,270 if held jointly
=Taxable gain 18,730
Tax due @ 33% = 6,180

More bad news, is that tax was due by 15th December last if the sale occurred between 1st Jan and 30th Nov and by 15th January if the sale occurred in December

They can buy the shares back at any time - paying or not paying the CGT has no impact

What do you mean by "US-based"?

If it is a US brokerage account, they could be liable to US taxes but that depends on other factors
 
if they want to buy back some of the shares, they first have to pay CGT? It can't be a case of not realising that gain?

I don't understand this point. The transactions are separate. They sold shares so they owe CGT according to jpd's calculation. They owe this whether they buy more shares of not.

The only way of avoiding CGT is to die. The capital gains disappear on death.

A bigger question for your relative is whether they have too much invested in one share. Given that they don't understand CGT , it's unlikely that they understand the importance of diversification. They are probably thinking "This is a great share and I have made lots of money on it and I will continue to do so." You should disabuse them of this notion.

Brendan
 
I think it's more reget. They didn't intend to cash out that much and they're hoping they can put some back in. I think there was some faint hope about not having to pay CGT on the amount that they put back in.

Thanks for the posts.
 
How is CGT calculated if the shares were a gift?

Is the CGT on the total amount?
Or on the gain, since they were gifted?
 
How is CGT calculated if the shares were a gift?

Is the CGT on the total amount?
Or on the gain, since they were gifted?

In short, there's Gift Tax payable in the year the shares were held (based on the value of the shares at the time of gifting) and the gain in value since gifting is liable for CGT now. There is an allowance of €3,000 against the first of these transactions and €1,270 against the CGT now. Effectively the full value of the shares would be taxed at 33% across the two transactions (depending on the rates in the years in question), less €4,270.

The person that made the gift could be liable for CGT in the year of gifting too.
 
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Thanks guys! Next time I'm asked for advice I'll pass unless it's within my domain. You've been a great help.
 
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