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.

Bacon report

With regard to Bacon III, where an individual has entered into a contract pre-15th June last and where a number of stage payments has been made prior to 31st January next but the final payment has not been made, how does the Bill treat these circumstances, in your opinion.

Mr B.L., e-mail

It would appear from the latest Finance Bill that you would have to have completed the transaction by January 31st next to avail of the transitional relief provisions in the Bill. The transitional arrangements apply to anyone who was in the process of buying a property before June 15th - in this case in the process means that they would have had to have signed written contracts - and who completes the deal by the end of January next.

Such people will be able to pay stamp duty at the level applying before the latest changes where such a situation would benefit them. However, while the Bill has yet to proceed through the Oireachtas, at this stage, the cutoff would appear to rule out people in your position. That would leave you paying at the new rates and thresholds.

In the case of second homes, the 2 per cent anti-speculative tax is subject to the same transitional arrangements.

Following our recent purchase of a holiday home for our own use only, we would appreciate if you could clarify the implications of the recent Bacon report re the same. We purchased the house in April 2000 and paid a nominal deposit. We then signed contracts in May 2000 and paid a 10 per cent deposit. We are due to sign final papers next week.

Ms N.F., e-mail

It looks like you might creep in under the wire. The fact that you signed contracts in May puts you ahead of the June 15th deadline and the closure of the deal this month would keep you well within the January deadline for transitional arrangements.

In that scenario, you would not be penalised by the 2 per cent tax on "speculators" for the first three years after the property is bought, nor by the higher stamp duty rates applying in the future on such holiday homes.

On a point of information, the fact that you have bought the home for your own use only would not be material to any decision. The Bill seems specifically to be aimed at such purchases where the property may lie empty for a period of time. In fact, landlords who own one or more properties can claim exemption from the new arrangement if they meet certain standards and register their income from the property/ies.

Irish funds

Do you know of any funds that invest primarily in Irish companies?

Ms J.H., e-mail

There are a number of funds which invest purely in Irish equities. These are offered by a whole gamut of financial institutions including AIB, Ark Life, Bank of Ireland, CGNU, Hibernian, Irish Life, New Ireland, Progressive Life, Quinn Life, Scottish Legal, Scottish Provident, Standard Life and Ulster Bank.

Some of the funds are simply ISEQ trackers, which have lost some of their appeal of late, and others are more actively managed equity funds. All, by their nature, invest in Irish companies.

One of the problems of investing in peripheral markets, such as Ireland, is that performance is quite often dictated by performance elsewhere, the US in particular. However, it rarely replicates it fully, meaning that, in a bull market, such as that of recent years, the full gains are not realised while in a more bearish environment, the Irish market might not suffer as much as other leading markets.

While the Irish market may not be as volatile as US markets, performance over the past five years shows that Irish equity funds as a sector have lagged its North American peers. Indeed, it trails the performance of both European funds and property funds over the same period, according to Moneymate.

If you are interested in pursuing such investment you can examine the performance of some of the funds each week on page four of the second section of The Irish Times's Business This Week supplement.