It’s almost the end of 2020 – and most of us will be happy to see it gone. Before we do, here are Moneycube’s five to-dos to wrap up your 2020 investments and finances.
1. Review your capital gains tax position
If you purchase shares directly, this one’s for you.
Every taxpayer in Ireland has an annual capital gains allowance of €1,270.
Of course, there have been major ups and downs in markets over the year. If you invested during the key period of April/ May/ June as markets recovered, you could be sitting on a material gain.
If that’s the case, now could be a sensible time to sell some shares and reduce your capital gains tax liability. You could crystallise a gain of up to €3,848 and eliminate the capital gains tax due by taking advantage of your annual allowance.
What’s more, if you are sitting on losses from previous years, you can offset the gains on your winners with any losses you have incurred.
After that, now might be a good time to talk to Moneycube about diversifying your portfolio by investing in funds…
2. Make your investing plans for 2021
2020 has produced winners and losers in the investment game.
If you held your nerve, and invested in diversified, actively managed funds with exposure to several asset classes, you will have been protected from the worst of the recent market movements.
If you’re excessively exposed to a handful of stocks, particularly those in aviation or hospitality, you’ll have had a worse time. Now might be a sensible time to rebalance your investments.
Talk to Moneycube about how we can help you diversify your investments and your investing plans for 2021.
3. Consider giving money to your children or grandchildren
In Ireland you can give up to €3,000 per year to anyone, tax-free for you and them. It’s called the small gift exemption, and you can give it to children in cash, or invest it on their behalf.
This can add up quite quickly. For example, as a grandparent, if you and your spouse each gave €3,000 to your son, his wife, and their two children, you could send €24,000 their way each year, with no capital gains tax or inheritance tax consequences.
4. Think about your 2020 pension contribution
Yes, you’ve got until the income tax deadline to do it – around October 2021. But now is a great time to take a look at your 2020 earnings and cash position, and consider what you could do to top up your pension. (We can help).
If you make that contribution soon, and turn your tax return in early in 2021, you’ll receive the tax deduction sooner, and get your money to work in your pension quicker.
Remember: if you run your own company, it’s a little different. Read on here.
5. Take stock of your tax reliefs
You can receive tax relief on medical expenses, education costs and more. You may want to accelerate some of these payments into December. That way you’ll get the benefit of the deduction in your 2019 taxes rather than waiting for another 12 months.
Revenue’s MyAccount service makes it fairly easy to claim tax credits and tax relief online.
