Your questions answered by Dominic Coyle. 

Aviva: I recently received correspondence from Aviva re their Scrip Dividend Scheme offering new ordinary shares in the company in lieu of cash dividends.

In their material, they state that cash in respect of dividends is not available to any person resident in the USA, Canada, or any jurisdiction outside the UK... "where such any offer would require compliance by the Company with any governmental or regulatory procedures or any similar formalities".

In short, can I avail of this scheme being a resident of the Republic of Ireland and, if this is the case, do you think it would be a good option in the long run?

I received my Aviva shares free many years ago. I was a policyholder at that time.

Mr R.C., email

The scrip dividend option has obviously caused a degree of concern among Aviva's estimated 90,000 shareholders in Ireland as I have received a number of queries this week on the issue. The simple answer is that you can join the scheme.

Scrip dividends allow people holding shares in a company to receive their dividends by way of further shares in the company rather than in cash. It is a relatively common occurrence.

It has a number of advantages, not least that people can acquire further stock in a company without incurring the full cost of brokers' commission. There is also the situation, familiar to the thousands of Eircom investors now holding Vodafone stock, where minuscule sterling dividends cost more to encash than their face value. Vodafone subsequently offered a scrip dividend alternative, which allowed shareholders accumulate dividends until they were able to purchase shares.

The downside to scrip dividends is twofold. First, if the company is a bum, you are only compounding your likely losses. Second, you will receive only the number of shares that can be fully paid for from the dividend.

The balance is usually held over until the next dividend date, which means the company gets to use part of your cash for six months or more.

It is also of little use to those individuals who choose their stock portfolio on the basis of dividend yield to augment their annual income. Of course, the payment of dividend by scrip issue also means that more shares in the company are issued, diluting the stake of those who choose not to participate.

The situation with Aviva is that Irish shareholders can avail of the scrip dividend option simply by filling out the mandate form provided. If you have not got a mandate form, contact the company and you will receive one.A company spokeswoman said it never intended to confuse Irish shareholders and that they were fully entitled to participate in the scrip dividend option.

As to whether availing of the scrip option is an appropriate investment option, I'm no more qualified than you to say, maybe less so. Insurers are doing well at the moment but pressures on costs and margins in the sector are constant.

Mortgages: I am a potential first-time buyer here in Dublin, having accumulated enough savings at this stage for a deposit. My partner and I want to purchase a two-bedroom property here, which will be my principal private residence, and I intend to rent out a room, thus servicing the mortgage payments entirely myself. I anticipate the total rental income will not exceed €7,500, thus this rental income will not, I assume, be liable for income tax.

My query is, given that I need my partner to provide additional security to gain mortgage approval, how does this affect his status or ability to purchase a second property, as he works in the south. He will be able to avail of a 100 per cent mortgage as a qualified professional.

Could we possibly make an arrangement with regard to the Dublin apartment/house, "two on mortgage, one on deeds", which would enable him to purchase also as a first-time buyer in Cork, and avail of the rental income tax-free threshold of €7,500, as well as first-time buyer stamp-duty rates? This will be his principal private residence.

Also, as mortgage-interest relief is applied "at source", does this imply that I can avail of the mortgage interest relief on my Dublin property, as the payments will come from my bank account solely?

We obviously would like to avoid the scenario where his purchase in Cork is treated as a second purchase, thus as an investment property and so subject to higher tax liability. Can he avail of mortgage interest relief as a first-time buyer on the Cork property?

Longer-term, the Dublin property will be sold when I return to Cork over a two/three year timeframe. Could you briefly explain the CGT implications here?

Ms D.M., Dublin

It isn't really the answer you want to hear but you only get one bite at the first-time buyer status. If you need your partner's financial muscle to secure a mortgage for this property, that will probably negate his prospect of being treated as a first-time buyer elsewhere, unless the lender is prepared for him to be guarantor for the mortgage loan without actually being named as party to the mortgage. Most will want him on the mortgage and some will insist on payments from a joint account. If he is on the mortgage, I imagine the lender will want him on the deeds.

There is a trend recently for parents to guarantee mortgage loans of offspring without actually being on the mortgage but it is still an outside chance in your case.

The practical end result for you is that he is likely to be treated as a second-time buyer for the purposes of stamp duty on the Cork property.

Provided you both genuinely use your respective residences as your principal private residence, you should be able to retain this status and obtain things such as rent-a-room relief and, more importantly, capital gains tax exemption on their sale.

If you do that, when it comes time for you to sell the Dublin property, your portion of the gain will be tax-free as it is your principal private residence. Your partner's portion will be treated as an investment property and he will therefore have to pay capital gains tax of 20 per cent on any increase in value.

On the issue of mortgage relief, your partner will be entitled to mortgage relief on any residential mortgage he holds but will not be treated as a first-time buyer. I would imagine the mortgage relief at source can be credited to whatever account you choose. However, given the slightly unusual nature of your planned financing of this property, it would probably not go amiss to consult an accountant before you progress much further.

Finally, returning to the question of rent-a-room relief, Mr D.D. writes in to remind me that the threshold is €7,620 and not €7,500 as I have stated in recent replies.

It's a small difference but given that every euro counts in the early days of a mortgage, you might as well maximise the potential relief.

Remember that any income over that threshold renders all rental income liable to income tax and the income limit includes charges for additional services like meals, laundry, etc.

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.