Q&A

Your questions answered

Double tax agreements - and your holiday home

Is there any benefit to buying a holiday home in Spain, a country where I understand our Revenue Commissioners have negotiated an arrangement with their tax people? Would it work out the same if I bought elsewhere in Europe?

What you are talking about is a "double taxation" agreement put in place by countries so that their citizens do not have to pay tax twice on the same income. For example, if you earn rental profit on an investment in a country such as Spain where a double taxation agreement is in place, and you pay tax on that income in that country, then any income tax you pay in relation to your investment can be set against your tax liability here. If you earn rental income in a country where there is no double taxation agreement, you must pay tax there and then declare the net profit here where it will be viewed as part of your income and as such will be taxable.

You can see the problem. However it seems from your question that you think Spain is the only country where a double taxation agreement is in operation. Far from it. There are, according to the Irish Taxation Institute, 44 countries where such an agreement is in place and the list gets longer every year as new agreements are put in place. Iceland and Greece were added to the list in 2005 and new treaties with Argentina, Chile, Egypt, Kuwait, Malta, Morocco, Singapore, Tunisia, Turkey and Ukraine are being negotiated. For more information contact your local tax office or log onto www.taxireland.ie/ir_tax/doubletax.

How to make sure you're not underinsured

A friend recently had a bad experience with insurance when she discovered that she was underinsured after making a claim for extensive fire damage in her kitchen - even though the damage claim of around €30,000 was well within the €130,000 insurance cover she had. She received less than two-thirds of her claim. It seems to me that insurance companies have it all their own way. I want to make sure that I am not underinsured and don't want to wait until I have a major claim to find out.

Your friend seems to have come up against the "average clause" in all home insurance policies. Without knowing the exact case, it would appear that the insurer looked at the total cost of rebuilding and decided that had your friend's whole house burned down and needed total replacement, her €130,000 of cover would only go two-thirds of the way towards meeting the cost. So when it came to her fire-damaged kitchen, it scaled back or averaged out her claim accordingly.

You can avoid such a situation by being adequately insured and as building costs are rising all the time, it's important to review the situation annually. Every year the Society of Chartered Surveyors (www.scs.ie) produces updated rebuilding figures which are an excellent and very clear guide for people trying to assess their insurance needs. Also consult a new clear and concise guide to home insurance produced by the Irish Financial Services Regulatory Authority at 1890 777777.

• Send your queries to Property Questions, The Irish Times, 10-16 D'Olier Street, Dublin 2 or e-mail propertyquestions@irish-times.ie.

Unfortunately, it is not possible to respond to all questions. The above is a representative sample of queries received. This column is a readers' service and is not intended to replace professional advice. No individual correspondence will be entered into.