Where should someone with no taxable income invest?

IRES has proven to be a total dud investment and there was a well publicised revolt by activists against the board recently , REITs aren’t a proxy for the property market and fall out of favour as an investment during periods of increasing bond yields , ten year British government debt is not far off the yield of IRES right now , which option is safer in the eyes of pension funds?

Not the Irish property vehicle
 

Direct Property Investment vs REIT

As someone who often posts about the positives of investing directly in property I am equally often told that the same potential upside is available with less risk ( or the same risk spread across multiple properties) and less effort. I came across this...
www.askaboutmoney.com
 
The optimum structure is a US ETF because you get the lowest investment cost and your dividend income comes with a 15% tax credit for DWT in the USA which can be set against Irish income tax or PRSI.

exposure to US federal estate tax can be held over using a qualified domestic trust in the USA (QDOT)
 
cremeegg said:

Direct Property Investment vs REIT

As someone who often posts about the positives of investing directly in property I am equally often told that the same potential upside is available with less risk ( or the same risk spread across multiple properties) and less effort. I came across this...
www.askaboutmoney.com
Click to expand...
I think you'll like this

www.thejournal.ie

Why Ireland’s biggest private landlord is struggling - despite average rents of €1,800 a month

The short answer: interest rates.
www.thejournal.ie www.thejournal.ie
 
I see the Reit sold to one of the housing charities:

Last week it reached a deal to sell almost 200 west Dublin apartments to the Tuath Housing Agency for €72 million and is looking at offloading further assets.

So it's 360K per rental. What rent, maybe 2K each A return of 6.7%.

I wonder where Tuath got the money. 72 million is a serious chunk of change.

About Us - Tuath Housing

tuathhousing.ie tuathhousing.ie

10,500 properties nationwide providing homes to over 27,000 tenants

Just love this bit:

Working for people and places, not profit

So the tenants of the most costly apartments (REIT) will now be tenants of a housing charity. Charging top rents. And acting like they are a benign being, who will get no flak, meanwhile struggling landlords will continue to be treated as despicable in Irish media and by Irish politicians.
 
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Marc said:
The optimum structure is a US ETF because you get the lowest investment cost and your dividend income comes with a 15% tax credit for DWT in the USA which can be set against Irish income tax or PRSI.

exposure to US federal estate tax can be held over using a qualified domestic trust in the USA (QDOT)
Click to expand...
a) This person has no taxable income; are you proposing that they sign-up for a blanket 15% tax leakage on their dividend income?

b) Do you know how much it costs to set-up a QDOT and the level of US assets required to make it financially viable? I doubt it’s a viable or relevant idea for someone with no taxable income.
 
Sarenco said:
Hi Brendan

I think a well-diversified, high yield investment trust, like City of London, would be ideal in these circumstances.

Does your pal have a pension fund (or funds)? If so, it might make sense to retire one of the funds (or split a bigger fund into separate PRSAs for this purpose) and draw down ~12,500 pa.

Personally, I’m not wild about REITs. There’s a reason iRes has a high yield…
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Is an investment trust better than an etf ?
 
Just to be clear - isn't the investment trust mentioned here just like a share that you buy and sell normally?
And not a trust that the individual gets involved in directly or anything like that?
 
Obviously any advice turns on the specific circumstances of a particular investor and we have too little information to form a proper opinion.

But I would like to clarify one point around non eu ETFs, and US ETFs in particular and tax.

The tax credit allowed under the US/Ireland double tax agreement is 15%.

When including the dividends on the ROS return there is a specific box for the US dividends under the foreign income section. There are two boxes under this section for US tax dividends - one for dividends where Irish encashment tax is also suffered on the payment and one for dividends where there was no Irish tax deducted from the payment. The gross amount of the US dividends should be entered in the relevant box and the ROS return will automatically allow a 15% tax credit in line with the double tax agreement.

This 15% tax credit is allowable against income tax and USC but it cannot be offset against PRSI.

Therefore, if the individual had an effective Income Tax rate of less than 15% the excess withholding tax can be used against USC.
 
Someone with no income investing in a US ETF would need north of €1.3m before getting full value for the 15% leakage to the IRS.

It doesn’t sound remotely relevant given what we know.
 
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FX risk on such a fund would be a no no for me.
I also dont like the with-holding tax situation, or the US estate tax exposure.
 
A small general point the question asked is where should someone with no taxable income invest? Not where should a bloke called Dave who has 52,567 to invest for 3 years and 4 months and is looking for an income of 5,276 and 45 cents.


U K. investment trusts invest in US companies. They suffer the 15% DWT.
This tax can’t be reclaimed by an Irish investor.

The same shares held via a US ETF suffer the same 15% DWT but you get a credit for tax paid via ROS.

Given USA is 60% of the market it’s logical that, all things being equal, you would want to pick up the tax credit.
 
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