Q&A

Please send your queries to Dominic Coyle, Q&A, The Irish Times, 11-15 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.

Inflation

In 1956, I inherited £500, a huge sum then. We put a £200 deposit on a house, paid the solicitor (huge fees, I remember, even then!), spent £50 on the wedding breakfast (I think it was £1 a head for 45 guests plus £5 for various expenses), paid for a honeymoon in Jersey, the wedding dress, one bridesmaid, etc. Any idea of how must it would be worth today? Would it be as much as £5,000?

A.N., Dublin

Putting the value of money into context as you seek to do is instructive on several fronts, not simply in putting a current value on what, as you say, was a huge sum back in 1956. The Central Bank put your figure through the cruncher and came out with a present day figure of £8,300, a substantial premium to the £500.

Putting your spending into context, the value of £100 in 1956 would be £1,660 today. So, the deposit on the house would have been £3,320 at today's value and the wedding breakfast would have cost £830 for 45 people.

Personally, I find the diminishing buying power of your £500 over the years more astonishing than anything it might now be worth. Today's homebuyers would be gobsmacked at being asked for a 10 per cent deposit of £3,320 - valuing the house at £33,200. The chances of paying a deposit of less than the entire current day value of your £500 would be remote, certainly in our cities.

Similarly, paying for a wedding with £8,300 would require the most extreme budgeting and care, to say nothing of the honeymoon and the solicitor's fees.

Who says everything is better in the Ireland of the new millennium? Your example shows just how much further your pound stretched back in the now maligned 1950s, even allowing for inflation.

Bacon report

My mother was left a substantial house in Cork by my aunt, who died about four years ago. There is a sitting tenant in the house. About two years ago I had the house valued by a professional valuer and I agreed a purchase price with my mother and signed an agreement to this effect. I will not have vacant possession of the house for another two years as the present tenant has a contract to remain in the house until then. I have paid my mother a percentage of the agreed purchase price but obviously the deeds of the house remain in her name and the remainder of the purchase price will not be paid until the current tenant's lease expires and I have vacant possession. I am wondering what the Bacon impact is on this situation, particularly regarding stamp duty? I do not have any further property except my family home.

Mr M.G., e-mail

I would like to be able to give you a definite answer, as the latest measures proposed by Dr Peter Bacon and enacted in the second Finance Act 2000 are a cause of worry to a large number of people, like yourself, whose situations do not fall cosily into any category.

Your predicament is that the deal to purchase your mother's house - the one left to her in the will - was sealed well in advance of Bacon mark III.

Understandably, you would have taken the decision to purchase and arranged the finance to so do in accordance with the conditions prevailing at the time. However, given the sitting tenant and the fact that you have not paid over the full sum to your mother, the deeds remain in her name.

Bacon III did provide transitional arrangements for people who had signed contracts before June 15th last but who had not completed the deal and would not do so until some time before the end of January next year, but that is of little use to you.

Having checked with several sources, it would appear to come down to the nature and precise wording of the agreement signed between you and your mother. The only way to get a definitive answer would be to submit the agreement and see what the ruling was. I know this is not very satisfactory but as I have not seen this agreement, and in any case would not have the legal training to give a definitive interpretation of it, there is little else I can say.

You should take the agreement to a solicitor, preferably one specialising in contract law, unless you are happy to place yourself in the hands of the Revenue. Not only is the question of the stamp duty at issue; there is also the matter of the 2 per cent anti-speculative property tax for the first three years, except in certain circumstances. That could amount to 15 per cent of the value of the house - and it would be the value at the time the deal was concluded in the case of the stamp duty and at the time the tax was assessed annually for the 2 per cent - well in excess of what you would expect to pay in stamp duty if the agreement was deemed to be valid for the purposes of qualifying as a pre-Bacon III purchaser.