What is the minimum to hold in Irish Government bonds that pays more than a deposit account after stockbroker fees are deducted

Tobyboy said:
Can I pick back up on this thread to see how anyone got on trying to buy Irish Government bonds.

I have checked on Degiro and there are bonds up there that have varied maturity dates available. This would seem much cheaper than the brokers here in Ireland. I was looking at bond that has maturity date in May 2027 that is trading at 90.50 at the moment. Not sure what the calculable percentage return is on this, as the coupon is very small. 0.2% I think.
Can I ask is this still tax free if you buy this with someone like Degiro and hold to maturity? Is buying from someone like them the same as anyone else as they are in Holland I think?
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There is another thread on buying Govt bonds that you should read.

I bought the 2027 bond on DeGiro.

Irish Government Bonds - Euronext exchange Live quotes

- Live Euronext stock exchange quotes, realtime prices, charts and regulated news
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Somebody on other thread said that the market in Frankfurt is not really deep/liquid, so the spread is wide???? I'm not sure about that.

The attraction is no CGT on the capital gain.
 
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Tobyboy said:
...Also, I am reading above there is no CGT on Irish Government bonds. Is this still the case if the bond was bought from someone else at a discount thus realising a profit on maturity? Is this profit definitely exempt from CGT?
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Yes, and that is what sparked off these threads over the last 12 months.

The rise in interest rates caused large falls in bond prices, meaning many trade below par, see below.

For example, buy the 2031 bond at 78, make 22 tax-free capital gain over eight years.

28.2% tax-free guaranteed return, as long as you hold until maturity.




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I recently dipped my toe into buying Irish Government Bonds knowing that any capital gain would be tax free. I started with 10k and so far have turned-over 2 transactions in the last 5 weeks. The account is with Degiro Each transaction costs €3 (€6 to buy and sell) and I have had no problems at all so far. I would highly recommend Degiro for this purpose. You can trade about 8 or 10 different Irish Government bonds with them.
 
RedOnion said:
The tax treatment is thd sane regardless of which broker you use.

The 0.2% is taxed as income, and the capital gain of 9.50, (if held to maturity), is exempt from CGT.


You're messing about now with different tax heads - is it a hypothetical question, or do you know someine with bonds? The 'discount' to market value would be subject to CAT. Only the gain from market value would be subject to CGT, but would be exempt.

Edit: I read question as discount to market value. Is that what you meant?
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Thanks for getting back - What I am asking is if I buy an Irish gov bond through a broker that's currently trading at say €90 (which was obviously issued at €100). Then I hold that bond through to the maturity date, thus getting back the €100, am I liable for CGT on the €10 that I make for doing so?
I realise I will pay tax on the coupon that's aside from this. But, unlike now, the coupon on a bond issued a couple of years ago is paltry anyway.
Thanks again
 
Tobyboy said:
What I am asking is if I buy an Irish gov bond through a broker that's currently trading at say €90 (which was obviously issued at €100). Then I hold that bond through to the maturity date, thus getting back the €100, am I liable for CGT on the €10 that I make for doing so?
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Ah, I misunderstood the question.

As @Protocol explained, the €10 would be exempt from CGT.
 
Tobyboy said:
Not sure what the calculable percentage return is on this, as the coupon is very small. 0.2% I think.
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If you mean the yield or coupon rate for this bond (IE00BKFVC568), which is 0.2% at face value (the issue price) - whereas at the current price (~€90) the yield is ~3.2%. Source: https://www.boerse-frankfurt.de/bond/ie00bkfvc568-irland-republik-0-2-20-27

So €10k will get you ~€320 a year (income taxable) at the current price of ~€90. If you hold to maturity, you will also get the difference between the listed price and your purchase price, so ~€1000 tax free.

Correct me if I'm wrong here.
 
€ 10k will only get you € 22 interest per year - € 10k @ € 90 = € 11,111 worth of bonds paying 0.2% interest
When the bond matures, in 2027, you will get € 11,111
 
But if the price of the bond decreases, the yield goes up - so the yield advertised on the bond is if the bond is at face value, i.e. €100. Or am I missing something here?

Edit, adding image:

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Ah I see, thank you! I was thinking the coupon rate and yield and/or interest rate were interchangeable, my bad!
 
tax_moron said:
Ah I see, thank you! I was thinking the coupon rate and yield and/or interest rate were interchangeable, my bad!
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Not the first time I have seen this recently with people who have bought bonds and its frightening......
 
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Sunny said:
Not the first time I have seen this recently with people who have bought bonds and its frightening......
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Thankfully haven't made any purchases yet but doing the groundwork, planning on using the first home scheme to the max and using bonds to stay ahead of it.
 
Sunny said:
What does that mean?
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In the process of buying our first home. Luckily we have a large deposit - but planning on taking advantage of the help to buy scheme, as well as the first home scheme (interest only loan at fixed rates depending on the length held, for the length of the mortgage).

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So lets say I get €95k from the FHS (considering a house priced at €475k), instead of using the €95k on hand as a deposit, I'll do the minimum deposit required, and I'll be buying Irish government bonds with a yield higher than the service charge rates.
 
Really basic question folks. Am trying to get started investing and thinking of the government bonds via degiro. Was originally thinking of trying EFTs but saw a few articles on tax implications so going to give that a hard pass for now.
So I've no access to a lump sum currently and just wondering can you purchase a bond for €100 on a monthly basis or is it designed for larger lump sum investments? I can't seem to.find details on the minimum buy in but apologies if I missed it in the thread.
 
Ashers said:
Really basic question folks. Am trying to get started investing and thinking of the government bonds via degiro. Was originally thinking of trying EFTs but saw a few articles on tax implications so going to give that a hard pass for now.
So I've no access to a lump sum currently and just wondering can you purchase a bond for €100 on a monthly basis or is it designed for larger lump sum investments? I can't seem to.find details on the minimum buy in but apologies if I missed it in the thread.
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They say DeGiro has very low transaction costs, though €100 a month would not I think make sense even with them. Maybe €1,000 every 6 months.
The usual stockbrokers would require much larger investments or maybe a minimum commission like €100.
 
@€3 per transaction and no maintenance fees, Bonds on Degiro are an easy purchase, but not in small denominations. I put about 100k into the 20/27 and 21/31 bonds during the year and have a €3k gain at the moment. The taxfree/after tax AER I calculated has dipped a bit recently as bond prices have rallied but they are still worth considering. Degiro is a bit restrictive on the purchases - you buy based on nominal value and need to have at least 10% extra in free cash for the purchase to go through
 
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