Buy house for son. He gets mortgage and pays us back.

B

Bronco Lane

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Our son needs to get a mortgage. However his marital situation is slowing his application down but is in the process of being sorted.

Is it possible for us to purchase a house in his name for cash using our savings, then for him to get a mortgage from the bank in his own name and pay us back once his marital situation has been sorted.

He would probably be looking for a 75% loan on the purchase price as we will be gifting him the other 25%.

House prices continue to rise so we would like to get moving as soon as possible.

Any thoughts or suggestions welcome.
 
I would say unless all sides in the martial situation are up to date on your plans and agree don't go there,
 
The last thing he needs in the middle of a divorce settlement is a newly acquired asset.

He's an adult; he needs to sort out the settlement issues first.

Take a back seat here for a bit.
 
Hi Bronco

Why would you buy a house in his name?

Buy a house yourselves as normal.

Then when he is in a position to buy it, he buys it from you as normal.

The additional costs of this are 1% stamp duty and two sets of legal fees - maybe €4,000.

Irritating but assuming the house costs €300,000, the total additional cost would be €7,000.

Brendan
 
Thirsty said:
He's an adult; he needs to sort out the settlement issues first.
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It has been amicably agreed between them, just to get the legal end sorted. A couple of houses of interest have come on the market and he was hoping to get things moving in tandem.
 
Bronco Lane said:
It has been amicably agreed between them, just to get the legal end sorted. A couple of houses of interest have come on the market and he was hoping to get things moving in tandem.
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For it to stay amicably all sides need to be in the loop all the time,
 
Brendan Burgess said:
Then when he is in a position to buy it, he buys it from you as normal.
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We have thought about this. €7k additional is OK to live with.

If we could tie it all up within a year it would be great.

Not sure if we want to own two properties at the same time though.

Food for thought though.
 
Bronco Lane said:
It has been amicably agreed between them, just to get the legal end sorted.
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That is all grand until he puts a picture of himself up on Facebook with his new girlfriend. Then what was amicable becomes nasty.

Or they have agreed everything amicably and they give it to two solicitors. And it turns nasty.

Nothing is agreed, amicably or otherwise, until all the legal work is done.

You could enter into a contract to buy the house and if the legal work on their divorce is done before the sale is closed you can assign it to him.

Brendan
 
I think you would struggle to get a mortgage for him to repay you. My understanding is banks are very loathe to do any kind of equity release at the moment, which is effectively what he would be looking for if the house was already in his name. He'd be looking to remortgage a mortgage-free house. His loan to you, by the sound of it, would be unsecured. Also, if the house is in his name, he would need to declare it as part of separation/divorce, there's no way around that aside from committing fraud, so again no matter no amicable things may seem that sounds like a total non-runner.
 
in a separation/divorce in Ireland, Is there such a thing as all legal works finished,
can you really say the agreement was reached in a friendly and peaceful manner if there are other things at the same time going on in the background and not declared,
if your son buying a home is in there in the mix maybe it might be easier to get a mortgage now in his own name,
 
Brendan Burgess said:
Hi Bronco

Why would you buy a house in his name?

Buy a house yourselves as normal.

Then when he is in a position to buy it, he buys it from you as normal.

The additional costs of this are 1% stamp duty and two sets of legal fees - maybe €4,000.

Irritating but assuming the house costs €300,000, the total additional cost would be €7,000.

Brendan
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I think that's what they are doing. And yes, two sets of costs.
Presume also buying a house and selling it to him at a discount might have a tax implication?
 
Brendan Burgess said:
Hi Bronco

Why would you buy a house in his name?

Buy a house yourselves as normal.

Then when he is in a position to buy it, he buys it from you as normal.

The additional costs of this are 1% stamp duty and two sets of legal fees - maybe €4,000.

Irritating but assuming the house costs €300,000, the total additional cost would be €7,000.

Brendan
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Looking at this also - you buy the house now - paying stamp duty and legal costs, let's say as BB suggests, 7k
Then you sell it to him a year or two down the road - lets ignore the "gift" element because that might actually be considered a gift for tax purposes and make thinks even more complicated - you have legal costs, he is buying so he has the same costs as you originally had (7k?) as the new buyer. So its a little more than 7k. I have no idea what vendor legal costs are but presume they are similar. Notwithstanding this he might be better advised to sort his legal situation out first.
 
If the son buys a house, he will pay 1% stamp duty plus €3k legal costs.

If the parents buy and sell the house, they will pay the extra costs of buying and selling the house which will be
1% stamp duty + 2 sets of legal costs.

Brendan
 
The tax implications are straightforward.

If you buy the house for €300k and it does not change in value, and you sell it for €300k, there are no tax implications.

If you buy the house for €300k and it increases in value to €330k and you sell it to him for €330k, you will pay CGT.

If you buy the house for €300k and it increases in value to €330k and you sell it to him for €300k, you will pay CGT based on the market value. No CAT or gift tax will arise as they are from the same transaction.

Brendan
 
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