Buying a home for a parent

S

Sarsfield

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Due to a combination of circumstances our mother will be needing somewhere new to live soon.

We (3 sons) are looking to buy her a small apartment. If we were to apply together, what % of the purchase price would be be likely to get from any of the lenders? We all have our own mortgages currently, but I don't believe any of them are particularly burdensome.
 
As long as you can show that you can afford the mortgage along with your own outgoings you will be able to borrow up to 90% of the purchase price. Depending on the circumstances it might be worth looking at having the property and mortgage in your mother's name with the three of you as guarantors/joint borrowers. This means that the mortgage will attract tax relief, no/lower Stamp Duty on a new property and no CGT liability.

Sarah

www.rea.ie
 
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Having the property and mortgage in your mothers name, as Sarah W suggests, has its own legal and tax ramifications.

If you three are in effect purchasing it and funding the mortgage, then depending on the amounts involved, there is an exposure to CAT.

I really don't understand Sarah Ws reference to CGT in the context of the purchase of the house. It would of course be relevant in the context of a future disposal.

I also don't understand the reference to stamp duty being lower if the property were in your mothers name. Even if she were a FTB, if the purchase monies are being provided by non-FTBs then that exemption can't be claimed. Either way owner/occupier relief can be claimed.

You would have to examine what your intentions are regarding the future of the house in the event of your mothers death before committing to having it in her name, but I don't see how this would benefit you anyway, as stated.
 
If the house and mortgage are in the mother's name and it's her PPR there would be no CGT when it is sold and the mortgage would attract tax relief in the normal way. Similarly if it's a brand new house she will pay no Stamp Duty (assuming it's within the exemption limits) as a main residence. This would be the same sort of transaction as a parent (or parents) going guarantor/joint borrower on a mortgage for their children and have the same exemptions as outlined by the Revenue for that situation.

Sarah

www.rea.ie
 
The €495,000 threshold for gifts from parent to child applies if the roles are reversed. In this case you could give her nearly €1.5 million.
I don't see how CGT or CAT are relevant?
 
I didn't mention CAT?? Wouldn't CGT be relevant if the 3 sons bought the property in their names for the mother to live and and then subsequently sold it at a profit?

Sarah

www.rea.ie
 
To qualify for FTB exemption- is this what you are referring to?- the OP must intend not to take a beneficial interest in the property AND must not contribute to the repayments.

To qualify as an owner/occupier ( for certain New House reliefs) the OP can be the purchaser as long as the property is occupied by someone who uses the property as their PPR. So it does not have to be in his mothers name to qualify for this relief.

As stated, putting the property in his mothers name, depending on the amount involved ( and prior gifts if any) has a CAT implication. It also has legal implications. The OP would be well advised to obtain some good advice before taking any such course of action.
 
Absolutely agree. I suggested it as an option ("depending on the circumstances") to look at. Another would be for each brother to remortgage/top up their own mortgages to buy the house outright.

Sarah

www.rea.ie
 
If your mother is a dependent-relative and she is not paying rent to you then there will be no CGT liability when the house is eventually sold. (My Mum lives in my previous house but the mortgage etc is under my name. The CGT situation was confirmed to me by revenue)
 
Squonk said:
If your mother is a dependent-relative and she is not paying rent to you then there will be no CGT liability when the house is eventually sold. (My Mum lives in my previous house but the mortgage etc is under my name. The CGT situation was confirmed to me by revenue)
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Did they give you reference to this? I am in the same position and would like to know for sure.
 
Squonk said:
If your mother is a dependent-relative and she is not paying rent to you then there will be no CGT liability when the house is eventually sold. (My Mum lives in my previous house but the mortgage etc is under my name. The CGT situation was confirmed to me by revenue)
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That is a very interesting loophole
 
johndoe64 said:
Did they give you reference to this? I am in the same position and would like to know for sure.
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Yes...they quoted a section of some revenue act. I'll try to dig it up. I was very hesitant in believing them also but the revenue guy was adamant (he was an expert in CGT who contacted me by phone following my initial inquiries). However...I defintely do suggest you contact them yourselves for your own piece of mind.
 
Squonk said:
Yes...they quoted a section of some revenue act. I'll try to dig it up. I was very hesitant in believing them also but the revenue guy was adamant (he was an expert in CGT who contacted me by phone following my initial inquiries). However...I defintely do suggest you contact them yourselves for your own piece of mind.
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My badly scribbled notes state " Tax Consolidation Act, Section 604 (?), Subsection 11 "...or something like that !
 
this looks to be it.

( 11 ) ( a ) In this subsection, "dependent relative", in relation to an individual, means a relative of the individual, or of the wife or husband of the individual, who is incapacitated by old age or infirmity from maintaining himself or herself, or the widowed father or widowed mother (whether or not he or she is so incapacitated) of the individual or of the wife or husband of the individual.
  • ( b ) Where as respects a gain accruing to an individual on the disposal of, or of an interest in, a dwelling house or part of a dwelling house which is, or has at any time in his or her period of ownership been, the sole residence of a dependent relative of the individual, provided rent-free and without any other consideration, the individual so claims, such relief shall be given in respect of it and of its garden or grounds as would be given under this section if the dwelling house (or part of the dwelling house) had been the individual's only or main residence in the period of residence by the dependent relative, and shall be so given in addition to any relief available under this section apart from this subsection; but no more than one dwelling house (or part of a dwelling house) may qualify for relief as being the residence of a dependent relative of the claimant at any one time.
  • [broken link removed]
 
KalEl- I have looked at that link and don't see where it says that a parent comes within the Group A threshold for a gift?
 
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