Buying Parents House at reduced market rate - Implications?

[lettermac]

Hello,

All help greatly appreciated.

Situation is simple................Parents house worth circa €800k. 5 siblings all moved out. Folks don't have much of a pension in addition to the state pension so need to supplement their income. Want to try to avoid equity release schemes and trading down not an option.

Could the folks sell the house to the siblings for €400k? Siblings take out one interest only mortgage in all of their names for this amount. Folks could still live in the house with €400k to spend/put away or whatever.

Related questions?

1. Would banks give the 5 siblings a mortgage collectively or would it be down to individual capacity? We would want interest only. What would be the best way to structure this?

2. Would we have to pay stamp duty? I think the rate is halved if between family members?

3. Presumably we'd have no gift tax liability as we each have a threshold of circa €490k.

4. Is there anything I am missing?

Many thanks,

 

[Brendan Burgess]

Your parents need to only supplement their income. So they don't need €400k. If you borrow €400k to buy their house, they will have to put it on deposit somewhere. It's unlikely that the interest received will exceed the interest paid.

So why doesn't one of you increase the mortgage on your home and lend your parents the money? No stamp duty complications. No serious legal expenses. Your parents will owe that person the amount borrowed plus interest accumulated at the mortgage rate. Borrow enough for two years. If they need more later, one of the others should remortgage.

Brendan

 

[bwdbwd]

Have a look at revenue.ie but I seem to remember reading that Stamp Duty and such likes are calculated on Market Value when the sale price is 'suspiciously' low, thus stopping people exchanging property at discount prices