House Hunters 05.06

Househunters in the Sun Magazine
May 2006
With D-Day drawing near for many SSIA holders, the question remains - what should you do with the money? Overseas property lawyer Tom McGrath guides us through some of the options.
Saving money has become less popular in Ireland than spending it in recent years, with many of us rarely leaving home without our new best friend - the trusty credit card. Unprecedented levels of personal debt led the government to introduce Special Savings Investment Accounts (SSIA) in May 2001 with the intention of encouraging people to save rather than spend- It was an offer many people in Ireland could not resist. Over 1.3 million people decided to take advantage of the 25 per cent top-up or tan credit by taking out accounts, with 42 per cent rushing to meet the 10 April 2002 deadline.

When the five-year accounts mature, between the end of May this year arid the end of April 2007, €14 billion will be released into savers' pockets and the question is what will they do with it. For anyone who saved the maximum of €254 they will be getting around €20,000, but it is thought that the average account will mature at around €13,600, according to Goodbody Stockbrokers. An opinion poll undertaken by Goodbody has also shown that around 37 per cent of the SSIA windfall will be spent with the rest being invested, and for property investment to figure highly.

Savers should be aware that when their SSIA matures they are entitled to the funds in the SSIA less exit-tan at 23 per cent on the profit, and will need to make a maturity declaration within three months of the maturity date. For more details on how to do this check out www.revenue.ie

Many SSIA account holders will reinvest their windfalls, and my advice would be to consult an independent financial advisor to find out exactly what's on offer and to talk you through the benefits and disadvantages of different kinds of investments. To find out whether a product you are being offered is good for your circumstances check out www.financialregulator.ie or phone the Financial Regulator on 1390 77 77 77.

While it's tempting to enjoy a splurge, most experts say SSIA funds should be put to good use. Investing in property is still a good investment and is predicted to be a popular option for many SSIA account holders, whether it's putting a down payment on a first home in Ireland or buying a second home in another part of the country. But one option many people will find attractive in the light of prohibitive property prices at home is to buy a place abroad. Countries such as Spain, Portugal, Cape Verde Islands, Turkey, Madeira and Germany all offer good-quality properties at affordable prices and other countries such as Romania, Bulgaria and Croatia are coming on stream, if you buy a property in an attractive location and close to major airports then you may be able to pay the mortgage with rental income. It is important to get good professional advice, as the legal process in other countries is usually very different to the way we do things in Ireland — it could save you time and money.

Another option that many people will be taking will be to renovate or improve their homes. With ever-increasing property prices plus the cost of stamp duty, this option is cheaper than moving house. Making changes to your home, whether it's installing another bathroom, an extension or having the garden done, and subsequently bringing the property up to modern standards can greatly improve your quality of life and level of comfort. And whether it is renovations to your Irish home or your overseas property, it can't do any harm to the value of the house.