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

Could you please confirm if Section 23 relief could be used against the recent 2 per cent tax levied on investors? Thus far, the Section 23 relief is usually set against tax on rental income. I have a property in Blackrock with £50,000 Section 23 relief for sale since April.

Mr A.D., e-mail

Section 23 relief was first introduced in the 1994 Finance Act as part of efforts at Urban Renewal. Essentially it allowed for relief in areas or on streets designated by the minister for finance after consultation with the minister for the environment.

The provisions vary according to whether the property is residential or commercial and whether it is owner-occupied or rented out. You do not say into which category you fall, although given the connection to Bacon, it would have to be one or other category of residential property.

Basically, for rented residential accommodation, the cost of construction can be allowed against Irish rental income, including rental income from other properties, provided - as is the case with all categories - that the property falls within size and quality guidelines laid down by the Department of the Environment. Site costs are excluded. If the property is owner-occupied, the full cost is allowed over 10 years in the case of refurbished property but only half the cost - over the same 10-year period - in the case of newly-built property.

On the commercial side, factory premises attract full relief while other commercial premises such as shops attract 50 per cent relief.

The crunch is that, if your property is owner-occupied, it only continues to attract relief for as long as you reside there as the first owner since the construction/refurbishment. This does not appear to apply for rented residential property.

The Revenue Commissioners say there is no provision to set off the anti-speculative property tax of 2 per cent a year over the first three years of ownership of second properties bought after June 15th, 2000 against Section 23 relief.

However, a reading of the explanatory memorandum accompanying the second Finance Bill, which will implement the changes approved following Dr Peter Bacon's third report on the housing sector, indicates that rented residential properties qualifying for Section 23 relief will not come within the purview of the anti-speculative property tax.

So it would appear that if the property is rented there would be no liability to this new tax. Of course, the legislation is only at the preliminary stage and there is nothing to say what amendments might or might not be made during its passage through the Oireachtas. All we can gauge is how the provisions are outlined at present.

The fact that the property has been for sale since April - before the new Bacon measures were announced - is irrelevant as far as I can see. It is the sale date that will influence how any property is treated under the new legislation. As you are no doubt aware, provisions such as Section 23 relief are very precise and so will be any measures introduced in this Bill. Given that you are talking about £50,000 worth of relief, it would do no harm to talk to a solicitor specialising in the area of property law.

Pensions

I am currently working in Financial Services in Dublin and have been on a permanent contract since February 1997, having joined on a contract basis in August 1995. A term of my pension scheme states that I lose all entitlements if I leave employment before five years of "permanent" service. As I am hoping to leave Dublin and move to Galway either late this year or early in the new year, I am wondering if there is any mechanism available for me to keep the four years of pension contributions I will have achieved at this stage. I do not make any AVCs to my pension. Is it possible to "payout" the remainder of the five-year term of the pension? What are my options?

Mr P.B., e-mail

I am afraid the news is bleak unless you delay your decision. Under the current Pensions Act, it is the number of years served within the scheme that counts. The Act sets down certain obligations on pension schemes in relation to people who have been members of such schemes for more than five years. Prior to that, the pension rights of members are at the discretion of the trustees. It is not unusual for trustees of such schemes to determine that those members failing to serve five years as members of the scheme relinquish their pension rights in full when they leave the scheme.

I know this sounds deeply unfair when, after all, you may have contributed to the scheme for anything up to those five years for no return but, as the law now stands, there is no way around it. On the plus side, the forthcoming and long-promised Pensions Bill 2000 will reduce this threshold to two years. That will be a big improvement but the Bill will not come before the Dail until October at the earliest. By the time it becomes law it could be next year.

If you have not moved job by that time, you would be able to avail of the new structures.

The important thing for people to remember in general when looking at pension rights is the amount of time one has been a member of the pension scheme, which is not necessarily the same as the amount of time one has worked for the company operating the scheme. For instance, many contract workers will find they do not have pension rights until or unless they become full-time employees.