A friend of mine and his wife are lending their son about €400k interest-free to buy a house.
A full mortgage will be drawn up so that if the son sells the house, the loan must be repaid.
I understand that the only issue arising is that there will be deemed an annual gift of around €4,000 a year which is below the €6,000 the two parents can give between them as a small gift.
Do they need to do anything in the mortgage agreement to make sure that they avail of this ?
For example, should the father give a mortgage of €200k and the mother a separate mortgage of €200k?
If interest rates rise, and it exceeds €6,000 a year, it will just use up the Class A threshold.
A full mortgage will be drawn up so that if the son sells the house, the loan must be repaid.
I understand that the only issue arising is that there will be deemed an annual gift of around €4,000 a year which is below the €6,000 the two parents can give between them as a small gift.
Do they need to do anything in the mortgage agreement to make sure that they avail of this ?
For example, should the father give a mortgage of €200k and the mother a separate mortgage of €200k?
If interest rates rise, and it exceeds €6,000 a year, it will just use up the Class A threshold.