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.

Joint ownership

I have recently moved to Ireland and purchased a house. I have no mortgage on this property and it is my main place of residence. I am living with my partner, however the house is entirely in my name. How can I ensure that my partner has equal shares in this property? 1. Is it possible to amend the deeds to include both names (we are not married)? 2. Can I "sell" half of the house to them for a nominal price? There would be no monies transacted (this would be merely a paper transaction), but would there be taxation implications? 3. I can of course include transfer of ownership in a will but I wish for the property to be equally owned even in the event of a separation.

J.F.K., e-mail

This is one of those areas where, in the eyes of the tax authorities, the world is black or white - either you are married or you are not and you cannot derive benefits in a non-marital relationship that you would receive as a matter of course in a marriage.

The position of the tax authorities is that any such transfer - other than between married partners - would attract capital acquisitions tax (gift tax). This is levied at the rate of 20 per cent on sums in excess of certain limits. These limits change each year. Non-married partners fall into category C - strangers, the lowest threshold, which includes gifts or inheritances to a non-family member. In the year to April 5th, the threshold for this group was £15,000 (#19,060). Since then, it has risen to £15,840 - assuming the Finance Bill 2001 clears the Oireachtas.

There is additional relief on the first £1,000 from any benefactor to any donor in any calendar year. In total, then, your partner would pay tax on the value of half of the property less £16,840.

This is the case even in the event of the "nominal sale" you posit. It is worth noting that it would also be the position in a will, as far as the Revenue sees it.

While one can see the interest of the Revenue in ensuring the system is not abused by people claiming to be non-marital partners simply to get around legitimate taxation provisions on capital gains and capital acquisitions, it does seem a bit wrong-headed in a society where such arrangements are increasingly common that there should be no recognition of their status throughout the tax code. As such, I think it would be worth chasing this one a bit further with a tax lawyer who is familiar with the treatment of people in non-marital relationships. You might get nowhere but, sooner or later, someone will.

Inheritance

Can you tell me what is the threshold for inheritance tax between brother/sister or viceversa?

Mr T.D., e-mail

Brothers and sisters fall into category B in terms of inheritance. Exactly how much that entitles them to receive free of tax depends on which tax year you are talking about. If the gift or inheritance took place before April 6th, 2001, a brother or sister is allowed to inherit £30,000 (#38,120) from one another free of capital acquisitions tax (inheritance tax). Any sum over that amount will be taxed at 20 per cent. In the Finance Bill 2001, which is currently going through the Oireachtas and will govern allowances for this shortened tax year, there is a provision of up to £31,680 free of inheritance tax, for siblings.

It is also worth noting that the first £1,000 of any gift from another person in a given year is free of capital acquisition tax. This measure can be used to effectively increase the amount granted free of tax.

Savings

We are considering saving around £150 (#190) per month under the new savings scheme. However, what we would like to know is, would we be better off using this money to increase the monthly repayments on our mortgage (£30,000), which has just under 20 years to run, at the current variable rate?

G.&A.R., e-mail

Instinct tells me you might be better off putting the money into the Government savings scheme but you would need to work out the figures. As a general rule, you do not save while you have debts. There seems little point in getting a return on your savings that is less than the current rate of inflation while paying a higher rate of interest on your debt. What skews the pitch on this occasion is the 25 per cent the Government will give you on top of your savings.

The choice you essentially face is whether you should put the £150 a month against your mortgage now or a greater sum against the mortgage in five years when the term of the Government savings scheme has run its course. If you accept that, it limits your choice of savings option. Unitised funds may produce a higher return but the costs of these schemes offset this and, in any case, there is no guarantee that they will not lose you money. If you are pencilling this cash against your mortgage liabilities at some stage, you are really restricting yourself to risk-free deposit savings options.

To determine exactly what would work best for you, you really need to get your mortgage lender to work out what effect paying an additional £150 a month off the mortgage would have on your overall mortgage debt. Against this, you need to weigh up the potential benefit of the investment in the Government savings scheme. To your £150, the Government will add £37.50 a month. Looking at the deposit schemes on offer, fixed rates of around 4 per cent look the norm - a figure that would not even match the current rate of inflation. If it were not for the Government bonus, there would be no argument.

At the end of the day, follow whichever option saves you more in the long run.