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.

Equity release

My mother has heard of a company that buys houses from senior citizens but allows them to live on in them until their death. Do you know the name of any such companies and if their reputation is good?

Ms L.B., e-mail

The scheme your mother has heard about is called equity release and it is a relatively recent arrival on the Irish scene. Bank of Ireland was the first to announce plans for such an option last October to allow elderly people release some of the value of their homes to finance their needs in their later years. Its product came on stream in February. Another company, Residential Reversions, announced plans in December for the same type of plan and National Irish Bank has subsequently done the same. It is a fair bet that most of the main Irish finance houses will gradually offer products in this market.

Equity release schemes are not new in themselves and have been on offer in Britain for some years. Equally, while I can not vouch for the reputations of individual companies, it is fair to say that most of those entering this market will be household names in the Republic.

The most important thing to remember is that not all equity release schemes are the same. As with competing products in all markets, your mother - or someone on her behalf - needs to check the different offerings and see which is best suited to her needs.

Bank of Ireland's product allows people over the age of 65 to borrow up to 30 per cent of the value of their property up to a maximum of £200,000 (#254,130).

This is essentially a tailored mortgage product and the entire property remains in the ownership of the individual. Interest on the loan is charged at a fixed rate of 6.9 per cent for the first 15 years. At the end of that time, if necessary, customers have the choice of a new fixed rate or a variable rate.

The loan is redeemed after the death of the mortgage holder, unless the property is sold or vacated by the mortgage holder before that date.

Residential Reversions' offering is slightly different. To start with, it is not available throughout the State at present, unlike the Bank of Ireland product. Secondly, the company buys a portion of the property in exchange for a lump-sum payment, a monthly income or a mixture of the two.

Residential Reversions' product is available to people over 70. The minimum stake it will take in a property is 25 per cent and properties must be worth more than £150,000. However, the minimum amount it will deal in is £75,000 - meaning that for lower-valued properties, owners will be looking at ceding up to half their property for the minimum sum.

The other important point to note is that the company buys its share at a discount to the property market and this can be quite sizeable.

Given the very different nature of the products, owners need to judge whether equity release is indeed the answer to their financial needs and, if so, which option is best.

Euro

As I understand it, the euro notes that enter circulation from January 1st, 2002, will feature national designs. That is, the notes will vary from country to country. Isn't this likely to result in difficulties using Irish euro notes on mainland Europe, similar to the problems one can have using Northern Ireland sterling bank notes in England? Are any measures in place to prevent this? Will I have to exchange my Irish euro notes for Spanish euro notes to avoid difficulties in Spanish shops, for example?

Mr P.S., e-mail

You are right that each of the 12 member-states of the euro zone will issue euro notes and coins that will contain certain national features. However, the idea of the euro zone is that these notes will be interchangeable. As such, the notes issued in the Republic will be legal tender in each of the 12 member-states that have signed up to European Economic and Monetary Union. You will be able to spend those notes and coins in any member-state.

Residence and SSIAs

I'm still not clear about a person who goes abroad for some time during the five years of the special savings incentive scheme. You state: "You can remain ordinarily resident [in the State] for three years after you move abroad." What is the position of a person who is going abroad temporarily or has recently gone? Can they open such an account and pay contributions into the scheme?

S.Q., Dublin

If it's any consolation, you are not alone and that is not surprising. The area of ordinary residence is a construct of the tax code and not one to which we easily relate in our day-today living.

First, how do you become "ordinarily resident"? If some one has been resident in the Republic for three successive tax years, they become "ordinarily resident" from the start of the fourth tax year. Therefore, most Irish taxpayers, in addition to being resident in the Republic, would also be ordinarily resident.

When does "ordinary residence" end? Having become ordinarily resident here, you remain so for three full tax years after you leave the State. For example, if as someone of "ordinary residence" status, you left the State this week, you would remain ordinarily resident until the end of the 2004 tax year (remember, we are moving to calendar tax years this year). There are some income tax rules applicable that basically mean you do not have to pay Irish income tax on money earned wholly abroad but you do on any other income, with the exception of £3,000 (#3,812) a year.

Thus, in the case you mention, someone who has gone or is considering going abroad temporarily would be considered an ordinary resident, provided they had been here for three full tax years prior to the departure. They would be able to open and contribute to a SSIA. If their temporary stay abroad exceeds three years, they are no longer "ordinarily resident" and no longer able to open or contribute to such an account.