Q&A

The Irish Times guide to managing your personal finances.This week Inheritance, Eircom and Property.

Inheritance

My mother was one of three children. Tragically, both she and my father died several years ago. None of her family has ever bothered with us nieces and nephews. Now my grandfather is 94 and owns a valuable property in the country, the question is whether I and my siblings have any right to my mother's share of this property on the death of my grandfather. - Ms M., Dublin

There is no obligation on your grandparents to bequeath any part of this property to you. Indeed, there would have been no requirement for them to pass on a share to your mother if she were alive. The only obligation your grandfather has under the succession rules is to his wife. Of course, from the tax- planning view, it might make sense for the family to spread any future inheritance through the family to reduce the bill for capital acquisitions tax.

But should your grandfather die without making a will, the situation would become complicated again. If your grandmother is still alive, she would inherit two-thirds of the entire estate and the children the other third. This third would be divided between the three children and you three would share your mother's portion. If your grandmother is not alive, the estate would be evenly divided between the children and your mother's share would be divided among you three.

Eircom

On the vexed topic of Eircom shares and capital losses, one area that you haven't addressed is how the bonus shares that were issued should be factored into the calculation. - Mr J.B., Dublin

With everything else that was going wrong for Eircom, you may have missed it but we did cover the issue of bonus shares. These basically carry a nil cost and therefore can contribute to a capital gain but not to a capital loss.

Property

I bought a quarter acre site on the Howth Road in 1949, for which I paid £275 plus a ground rent of £20 a year. I built a detached house on the site in September 1949. Some years ago, I bought out of the fee simple at a cost of £140. I am now an octogenarian and the sole occupier of my house, in which I hope to end my days. While members of my family help generously in keeping the gardens in good trim, they all have houses and gardens of their own to care for. My own gardening contribution, I fear, is nominal.

I have been approached by an architect who would be interested in acquiring a plot of about 20-25m by 8-10m at the end of my back garden and fronting on to a public road on which to build a dormer-type bungalow and for which he would pay €80,000-€100,000. Before committing myself to the proposal, I would like to know what stamp duty or what other taxes the Revenue would levy on the sale, on myself and on the purchaser, and the approximate amount of those charges. - Mr S.O'H., Dublin

The major tax charge you face is capital gains tax at 20 per cent on the value of the land you are selling, over and above the basic capital gains tax-free allowance of €1,270. This would amount to €15,500 and €20,000 depending on the value of the site. The purchaser faces the prospect of paying stamp duty on the deal.

Investment losses

In year 2000, I made the following investments:

a) Friends First Managed Fund

b) Friends First equity fund

c) AIBc Global Equity Fund

d) EBS Balanced Fund

e) EBS Growth Fund.

They have all dropped in value by, respectively, 11 per cent, 19 per cent, 65 per cent, 7 per cent and 9 per cent. I do not want the money now but I do hate to see it dribbling away. Should I cash in some or all of them? - Mr P.P., Kildare

You should get specialist advice but, as a general rule, you should take the long-term view when making such investments. Over time, equity-based investments such as these funds have outperformed other forms of investment.

However, equities are, as you are discovering, more volatile than certain other investment classes and you certainly seem to have taken on these investments at the start of a sustained period of decline. If you want out, you need to ask yourself where you are going to make up the loss you have incurred recently. You would probably have to look at going back into equities and, if you chose sensibly back in 2000, there is nothing to say you would not be eyeing up the same funds again.

Having said that, the climate even within different sectors of the equity market has changed since you took out these funds and you would do well to spend time getting professional advice before deciding whether tinkering with your investment strategy is in order.

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.