Dominic Coyle answers a selection of your questions

Am I right to avoid buying property?

I am a fairly well-off 35-year-old male who, due to paranoia about a housing crash that goes back to the late 1990s, has never bought. As a result, I have a large amount of cash/equities and am wondering if I am using my money well.

I rent a room in a house in Ranelagh for 375 a month, a rate I know is very attractive. I am beginning to think that, for now, I may as well continue renting into the future rather than buy a place out of town and be lumbered with a mortgage of up to 2,500 a month (assuming I spent 500,000 or so for a half-decent place) plus a daily commute. I wish I had my own house in town, if for no other reason than I may soon get a place with my girlfriend, which will push up any rent payments.

I earn a basic of 90,000 per annum and expect a bonus of more than 20,000 each year. I have cash savings of 70,000 making 2.8 per cent, shares in AIB worth €175,000 and other shares valued at €80,000. These equities give me a dividend of about 8,000 before tax. So, in essence, all reasonable rent is covered by my dividends.

I take home about 4,000 a month, €2,300 of which goes into my savings account and 254 into my SSIA, which has two years to go. My company contributes 7.5 per cent of my salary to a group pension and I contribute a further 17.5 per cent (AVC and pension). I have a two-year-old car and have no credit card or debts. I also have no life insurance or health insurance.

The funny thing is, if I decide to buy a house near town, which I should have done in 1999, all my funds will be used, leaving me broke. Is there anything sensible I can do with my cash or am I right to continue to avoid property?

Mr R.S., Dublin

As I see it, the one thing you have done right is to open a special savings incentive account (SSIA) and put the monthly maximum into it. To be fair, you also seem to be relatively well covered on the pension front.

That apart, I am not sure where you have been receiving advice in recent years. I am even more confused as, from other information gleaned from your letter, I understand you are reasonably closely connected with the property industry. How, on that basis, you could have determined back in the late 1990s or at almost any point since that the residential property market was liable to crash to the extent that you would be faced with a position where you had negative equity on your home is bewildering.

It is only in the very recent past that the prospect of negative equity in the Irish market has been discussed as a real threat - and even then only for a small section of potential purchasers.

I am also worried that you are confusing the notion of property as investment and property as a home.

One might hope that a home would appreciate in capital terms - and the history of the property market even before the recent "irrational exuberance" indicates that it should - but it is only one of a series of considerations in buying a house, and not the most significant by any means.

According to your own figures - monthly savings of €2,300 to say nothing of the bonus or savings - you have more than enough to buy a significant property in Dublin and manage a mortgage without being in penury.

You could take out a €500,000 mortgage over 25 years at current rates and face repayments of close to what you are now putting into your savings account each month - and you have more than enough savings to put down a significant deposit while still retaining some for any future rainy day. Even if rates rise, you have the latitude to cope.

So, is there anything sensible to do with your cash? I suggest you put at least some of it into a home (as against a property investment). Your circumstances dictate that you are going to have to move accommodation and your letter indicates that you have a hankering after your own property. At your age and income level, there are limited attractions to living in a single room. Are you right to continue to avoid property? No. The mantra of the property market - location, location, location - still applies but your circumstances should ensure that you are not forced to move into a far-flung dormitory town that is likely to be the first to feel the chill winds of any cooling in the property market.

For someone so careful about investment, you should also consider taking out life and health insurance.

Tax on pension

I am in receipt of a reduced European Community/UK pension of 1,000 per annum. Is this regarded as taxable income? I have other income of 26,000 per annum?

Ms F.H., Dublin

All income is regarded as taxable unless expressly stated otherwise (such as with income from An Post savings certificates). On that basis, your small annual pension would have to be taken into account when assessing liability.

Having said that, you would need to check that this pension has not been taxed in another jurisdiction. If that were the case, you would be able to benefit under the terms of double taxation agreements the State has in place.

Of course, if you are over 65 and married and the €26,000 makes up your entire income, then your income would fall under the exemption limit, which currently stands at €33,000 for a couple and €16,500 for an individual.

Inheritance limits

The threshold for gift/inheritance tax from a parent to a child is about €440,000 but from a child to a parent, sibling or niece/nephew it is only about €44,000. Does this not discriminate against single people who do not have children?

Mr E.O'B., Cork

The thresholds are designed to facilitate the passing of what is considered reasonable wealth within an immediate family free of tax. They were raised significantly a few years ago when it became clear that rapidly rising property prices were forcing close relatives to sell a family home bequeathed to them to meet tax bills.

I do not see how it is discriminatory. It is not designed to benefit the donor - if they are single or otherwise - but the beneficiary on the basis of the closeness of their relationship to the person making the gift or bequest.

Your interpretation would have the capital acquisitions tax code designed from the donor's perspective, which is not the case. By the way, the relevant figures are €466,725 and €46,673.

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. No personal correspondence will be entered into.