I took out a government SSIA equity savings account with Eagle Star in April 2002.

At maturity of this account in 2007 I left the capital in as an investment. Recently, I got a letter from Zurich Life (formerly Eagle Star) to say that they are required by Revenue after a period of eight years to deduct tax at 41 per cent on the capital and they have now deducted €2,500 from this account.

What I would like to know is can the capital gains deduction on this type of SSIA account be offset against capital losses incurred on share dealings in previous years.

Mr G O'B, email

Is it eight years since the boom times of the special savings investment account (SSIA)? With all that has happened since, it often feels even longer ago that all the “plain people of Ireland” – or the vast majority of them – got something for nothing from the government.

Of course, as with so much in economic policy, the SSIA scheme came along just when it was no longer needed and helped fuel some of the subsequent over-reaching for which so many people are still paying such a heavy price.

However, for some, like you, there was no sudden rush to use your SSIA windfall to over-extend, to buy that holiday home in Bulgaria, or whatever. Instead, you quietly left your money invested, or at least most of it.

And now, out of the blue, you have this tax demand. Effectively the eight–year rule is a measure introduced to stop people avoiding tax simply by continually rolling over their investment.

In the old days, the Revenue taxed investment fund profits every year. You still see some of these “old” funds around. Some of the more popular remaining ones are listed in the “net funds” section of our weekly unit funds page (see page six).

However, the introduction of “gross roll-up” in the 2000 Finance Act meant this was largely no longer the case. Under this new regime, funds remained invested in full and Revenue only taxed the profit when they were encashed.

To compensate Revenue for the loss of annual income, the rate of this exit tax was 23 per cent – the standard rate of tax plus three percentage points.

But what if people held onto funds for a very long time? Well, that is why the eight-year rule was introduced.

Essentially, if you are still invested after eight years, the fund is obliged to tax any profit on your fund and return it to Revenue as if you had sold out of the fund. There is, as I understand it, no need for you to do anything – and there is certainly no obligation to sell your asset.

I have seen certain references with some investment houses that it is up to the individual investor to assess and pay the tax, but I do not believe this to be the case.

I believe the onus is on the regulated investment house to calculate the tax owing and return it to Revenue. Certainly Zurich Life/Eagle Star seems to be of the opinion that it makes the deduction and informs you.

You should note that only the profit on your fund is taxed, not the underlying capital investment. What you rolled over at the time of the SSIA maturity should remain as it was then.

If you have made no profit, or even suffered a loss, no tax is due.

However, where tax is owing, it is not inconsiderable. That original 23 per cent rate of exit tax has risen sharply in recent years along with so many other taxes on capital. It now stands, for most people, at 41 per cent, which will clearly eat a major chunk of any investment gain.

Once the tax is paid, there is nothing to stop you remaining invested in the fund if you feel it is performing for you. It will not be subject to tax again for a further eight years.

Should you sell your fund down the line, any tax paid at these eight-year intervals will be set against any final liability and – if the investment cycle turns, I understand there is the possibility of reclaiming some of the tax paid if – upon selling – it emerges your tax liability would be less than you have already paid.

The bottom line is that the government is wary of avoidance and the Revenue requires a certain flow of tax revenue.

Finally, on the point you raise about offsetting this tax paid against losses made elsewhere under capital gains tax rules, the answer is no. Exit tax does not come under the capital gains tax regime. Have I capital gain on home bought for kids? My husband and I invested in the purchase of second property with a view to helping out our children, as we live in the capital as house prices are unaffordable for them.

Neither of them want to rent from us, even at a reduced rent, as the location of the house is not suitable for either of them.

As we are getting old, we do not want to be left with the worry of renting the house out on a long-term basis to strangers. We are thus considering selling. The family home is in my husband’s name and the second house is in my name. Are we liable for capital gains tax, as each of the homes are in separate names?

Ms AM, Dublin

Oh yes you are. As far as the Revenue is concerned, each family can have only one principal private residence – and as far as they are concerned, a husband and wife constitute a family and cannot select separate principal private residences.

If memory serves, there is some provision to allow for a couple who may be separated due to work commitments but, insofar as it exists at all, it is fairly tightly controlled.

Unfortunately, your foresight in trying to lend a helping hand to your children has rebounded on you, given their circumstances and, more particularly, the location of the property. If you do decide to sell at this stage, you will be liable on capital gains tax on the sale price.

You can allow for deductions to cover the cost of buying and selling the property and certain work on its upkeep and and upgrade.

There is also the prospect of indexation to reflect the impact of inflation on the value of the property, but that will apply only if it were acquired before the end of 2002, which, from your letter, appears unlikely.

It might cross your mind, if you still want to hold to your original intention of helping your children with the not inconsiderable cost of living in the capital, to gift the property to your two children.

As its location is not suitable, they could then sell it and use the proceeds to set themselves up somewhere more convenient.

Unfortunately, that will not get around the issue of capital gains as you will still be liable to CGT on the difference in the value of the property on the date it is gifted compared to when it was bought – allowing for the deductions mentioned above.

Naturally, such a gift would eat into the lifetime limit of €225,000 each of your children could receive from you and your husband, but it might still make more sense to gift them the property now when they need the help getting started rather than waiting until you pass on – a time when they may hopefully be more comfortable financially themselves anyway.

Send your queries to Dominic Coyle, Q&A, The Irish Times, 24-28 Tara St, D2, or email dcoyle@irishtimes.com. This column is a reader service and is not intended to replace professional advice.