An Irish Times guide to personal finance.

Property

We are a married couple who own a house we bought 10 years ago. Our mortgage is now nearly finished. We are considering remortgaging this house up to 90 per cent of the value and converting it to an investment property in order to rent it out. With the equity released we intend using this money plus getting a new mortgage to buy another property to use as our main residence. Can you let me know if there is any tax or stamp duty implications on the remortgage of our existing property by converting it to an investment property? What are the tax implications should we dispose of the investment property in the future?

Ms E.O'B., Dublin

The conversion of the property to investment status should not have any serious tax repercussions. Following Budget 2002, stamp duty on investment properties reverts to the same level as that on other residential property purchases. In addition, the Minister for Finance has restored mortgage interest relief on loans taken out to fund the purchase of investment property.

However, you will need to check with an accountant whether a remortgage - basically artificially creating a loan on a property that is almost paid for - will qualify for interest relief. Certainly, there would be no problem if you were borrowing the money to purchase an investment property. However, you want to acquire the new property as a principal private residence. In essence, of course, your situation is the same - you own your home and an investment property, both with loans on them - but there may be certain procedures to be followed in ensuring eligibility for mortgage interest relief.

Another element you need to consider is that your lender may charge a different rate of interest for a loan to finance investment property.

What does certainly change with regards to tax is the situation if and when you go to sell the property. Your principal private residence is not subject to capital gains tax upon sale but other property you own is. Therefore, you would face a capital gains tax charge on any eventual sale.

SSIAs

Could I ask, please, what is the position where a person dies during the period of investment in an SSIA account?

Mr P.D., Dublin

If a person dies during the term of the special savings incentive account scheme, their account is deemed to close. However, unlike those who voluntary close their accounts during the five-year term of the SSIA, they, or their estates, do not face prohibitive tax on the account. The account is treated as if it had run the full five years and only the interest or investment gain is subject to tax at the standard rate (currently 20 per cent) plus three percentage points - a total of 23 per cent.

Savers closing accounts during the five-year term for any other reason face the same rate of taxation - but on the entire sum in the account.

Please send your queries to Dominic Coyle, Q&A, The Irish Times, D'Olier Street, Dublin 2 or e-mail to dcoyle@irish-times.ie. This column is a reader service and is not intended to replace professional advice. Due to the volume of mail, there may be a delay in answering queries. All suitable queries will be answered through the columns of the newspaper. No personal correspondence will be entered into.