The BMW region of Ireland - the border, midlands and west - is thriving, and centres like Sligo, Letterkenny and Carrick-on-Shannon are enjoying economic buoyancy. The special status of the north-west region is attracting firms away from the overcrowded east, with promises of higher grants. The optimism of Barry Egan, director of Enterprise Ireland's north-western region, appears well-founded.

"Quite a number of companies, largely Dublin-based, are looking to move out to this area. Over the past year, we have had between 50 and 100 inquiries. This represents a big increase on previous years and I think that the figure will grow. We have had three inquiries in the past week alone, one from a services company, one from a leisure products manufacturer and one from an engineering firm."

"One Dublin company we're talking to has experienced staff turnover levels of 50 per cent a year. Such attrition rates, combined with labour shortages generally, traffic congestion and high costs are important factors in influencing companies to relocate." Barry Egan also points to environmental factors, like the plummeting air-quality levels in our major cities.

"Private companies can qualify for assistance of up to 40 per cent of the capital cost of a project where the investment is taking place in the BMW region. In the case of small to medium sized enterprises, the upper limit is 50 per cent." The corresponding limit in the case of investments in the mid-west, southwest and south-east (each of which regions has plenty of pockets of deprivation) is 20 per cent rising to 30 per cent in the case of small to medium-sized enterprises (SMEs). The upper aid limit on projects locating in Dublin is just 17.5 per cent rising to 27.5 per cent for SME investments.

This raises the prospect that the drain of human resources out of the Sligo area will be reversed. Lower property prices mean that it is much easier to attract returned emigrants, or for that matter immigrants, not to mention people from the east coast. Barry Egan knows of one executive who managed to get a house in the town for between £50,000 and £60,000 less than the price he would have had to pay in Dublin.

There is a menu of tax reliefs from which to choose depending on location. According to Sligo-based auctioneer, Declan Byrne, the main attraction is the Rural Renewal Scheme which applies in all of Leitrim and Longford as well as south Sligo and north Roscommon. Areas close to the main towns are benefiting from an upsurge in investment. These include Collooney, Ballymote, Tubber curry and Ballisodare.

People can claim relief under the scheme while investing in areas a few miles away from Sligo town. "The closest they can get is around five miles. Tubbercurry is around 22 miles out. The scheme is having the effect of extending the Sligo urban area," according to Mr Byrne.

The scheme covers people investing in both new buildings and conversion of existing ones for letting or for owner occupation.

It extends to investments for commercial as well as residential purposes and runs up to the end of 2002.

In the case of investments for letting, tax relief can be deducted from all other rental income arising in the State in that year.

An important distinction worth noting, according to Sligo-based tax expert Kenneth McMorland of Gilroy Gannon, is that so called "profit rental income" is what is subject to taxation. In other words, deductions may be made for interest on any borrowings incurred as well as the cost of repairs, home insurance and any letting related fees.

In the case of new construction, relief can be claimed at 5 per cent a year for 10 years. For refurbishment, this rises to 10 per cent of the total cost over the 10 years.

The building must be used solely as a dwelling and as the main residence of the claimant.

Reliefs under the scheme are now also available to people investing in commercial property which they plan to let. The investors have the option of either claiming relief on 50 per cent of the cost in year one, or else it is claimed by way of a write-off of 4 per cent a year. This rather restrictive formula leaves less room for manoeuvre from the point of tax planning, according to Mr McMorland.

Where a company or individual owns and occupies the building in question, up to 50 per cent of the capital cost can be claimed in the form of "free depreciation" - choosing the year in which to claim while writing off the remainder of the cost over 13 years at 4 per cent a year.

Developers who decide to hold on to some of the properties which they have developed cannot claim any relief. In Kenneth McMorland's view, developers are being discriminated against under the terms of the incentive. However, it would appear that this was a condition set at EU level when approval for the scheme was secured.

To date, the scheme has stimulated considerable development activity in the north-west, particularly in the towns of Collooney, in south Sligo and Carrick-on-Shannon in Co Leitrim.

Proposals for a couple of large-scale office and retail projects of at least 100,000 sq ft each in Carrick are in the course of preparation.

There is now also considerable interest in a proposed Town Renewal Relief Scheme, under which towns like Charlestown, Bellaghy, Rosses Point and Strandhill could be designated.

Reliefs are also available for people investing in hotel developments in Sligo, Donegal, Cavan and Leitrim.