Buy out siblings mortgage question

Hi, Our family home was left to us siblings. Nothing has been done with the property and it’s 18 months now. I don’t want the property to deteriorate but no definite plans for it decided yet, I try to broach subject but it’s not set aside to talk about it. I think it’s best for one owner as they can decide to get work done and to rent it out etc…My query is there are 2 quotes from an estate agent….if I was to go with lower quote to offer family which is 25k less than the other, could I do this as it is basically all I could afford reasonably as well as my own family mortgage. Would there be tax implications or would I even be allowed to offer lower price or do you have to go with most recent price?

Who is the executor?

Do you have Grant of Probate?

Does the will direct that the property is sold?

raglan said:

Our family home was left to us siblings.

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Has probate been granted and the property is now in the names of all siblings?

raglan said:

My query is there are 2 quotes from an estate agent….

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Do you mean valuations? If the estate agents valued the property then you would only need to offer the amount covering your siblings' shares since you already own a share yourself.

raglan said:

Would there be tax implications or would I even be allowed to offer lower price or do you have to go with most recent price?

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I doubt that a difference of €25K would be of material interest to Revenue in relation to taxes and estate agent valuations are usually just an educated guess. I'm assuming that the two valuations are reasonable estimates of the property value and €25K isn't a huge percentage of the property value?

If you're going to buy out the property then you'll have to pay conveyancing costs and probably stamp duty on the value of your siblings' shares.

raglan said:

I think it’s best for one owner as they can decide to get work done and to rent it out etc…

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raglan said:

if I was to go with lower quote to offer family which is 25k less than the other, could I do this as it is basically all I could afford reasonably

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Why do you think that getting into the landlord game is the most appropriate investment option for your circumstances? Have you properly assessed the business plan for such a venture?

Edit: post crossed with @DannyBoyD's post.

ClubMan said:

I'm assuming that the two valuations are reasonable estimates of the property value and €25K isn't a huge percentage of the property value?

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And I think we should also add that the quotes should be recent.

raglan said:

if I was to go with lower quote to offer family which is 25k less than the other, could I do this as it is basically all I could afford reasonably as well as my own family mortgage. Would there be tax implications or would I even be allowed to offer lower price or do you have to go with most recent price?

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You can offer your siblings anything you like for their shares in the property. Obviously, the lower the offer is, and the bigger the gap between wha you offer and what your siblings think (or fondly imagine) their shares are worth in today's market, the less likely they are to accept it.

If what you offer is less than the current market value, and if your siblings nevertheless do accept what you offer, then you could be looking at a gift tax liability (on top of the conveyancing and stamp duty costs that Clubman already mentioned) because your siblings would be effectively gifting you the difference between what you pay and what their shares are actually worth.

If your siblings are amenable to selling, the usual way a deal like this would proceed is that you would get an up-to-date valuation from an estate agent agreed between you and your siblings (or a couple of valuations from a couple of agreed estate agents) and you would then offer them the value of their shares, based on that valuation (or on the average of those valuations, if more than one). That's generally seen as being fair both to you and to your siblings, and it won't give rise to any gift tax problems, because there is no element of gift in the transaction.

If you decide you can't afford to buy out your siblings on that basis, or if you are persuaded by the considerations that Clubman has mentioned that you don't want to be a landlord, then you should probably press your siblings to agree to sell the property in the open market and divvy up the proceeds. The house will deteriorate if left vacant and unused, and you'll have difficulty insuring it, etc. It's not in anybody's interests to have signficant wealth tied up in an asset that doesn't generate any income and that is progressively deteriorating.

If your siblings won't agree to this you can, in the last analysis, go to court and have the court order what is to be done with the property (which is, most likely, "sell it and divvy up the proceeds"). But that will be slow, and very expensive, and probably very destructive of your relationships with one or more of your siblings, so don't go there unless you really have no alternative.

raglan said:

I try to broach subject but it’s not set aside to talk about it.

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Not sure what this means, but I presume it's that your two siblings do not want to discuss the topic.

Do they use the home?
Might they plan to use it for their children if they are going to college?
Might they want the house for themselves?

I was the Executor for my aunt, and wanted to put her house on the market immediately. Her two sisters were horrified and said I must wait at least a year as it would be unseemly otherwise. They were the beneficiaries, so I had no problem with that.

Would your siblings have a similar attitude? They need time to grieve?

I think you need to convene a meeting. During a housing crisis, it's a shame to leave it empty. And it will deteriorate or attract squatters. Suggest that it be sold. If they don't want it sold, then ask them to buy your share. The end result of the discussions might be that you buy it.

As others have suggested, the price is what you agree with them. The Estate Agent's valuations are only guides.

And while it's normal to pay the full price on conveyancing, you can agree anything you like. For example, if you can't afford the higher price, you can agree to buy it at that price with the balance to be paid over 5 years.

To answer some questions, probate has been done, I would be close to the area, others wouldn’t and the way the housing crisis is going I think it may be good to keep in case one of my kids may need it in the future plus the emotional end of it too as it’s a generational home. A relevant time has passed now and I see no harm in having let things lie for a year or so to grieve and decide what is best and not to rush into things but I suppose we all have to be realistic now. Thank you all for your feedback.

raglan said:

probate has been done,

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By which I take it to mean that you have Grant of Probate, so thats one question answered.

Can you answer the other two questions?

Emotional attachment and the possibility that family members might make use of it in the future isn't really a great basis for buying a property for rental purposes. You really need to look at this more from a business perspective, draw up a business plan, crunch the numbers, see if it's viable/profitable, understand the responsibilities and work involved in being a landlord (e.g. RPZ/RTB regulations, tax etc.), and ascertain whether or not this is actually the most appropriate investment option for your circumstances. You would presumably be ending up with the bulk of your net worth in a single asset class/geographic region (Irish domestic property) which is not a good idea from a diversification point of view.