Buying Mothers house

K

Kilmainham Apt

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Hi All

My dad remortgaged his house about 15 years ago to buy a work premises, those premises are now worth a fraction of what he paid for it and he tried to sell it for years, no interest. My Dad died recently and 240K is due to the bank in 2022 as his plan was to sell the premises and pay that off. I just point out my Dad fell into arrears when sick so no life insurance to pay off mortgage. My mother, a pensioner has no way to pay this money. Myself and spouse own 3 houses but it looks like we could get a mortgage of about 180K if I save up the balance between now and then. My question is the tax implications?

Should I try get mortgage on my own and If my spouse is on mortgage does that cause problem with inheritance threshold.
Can I buy the house at below the market value at 240k. (house worth about 350K)
As I won't be charging my mother rent will that cause problems with revenue as I'm effectively buying a buy to rent property but not actually receiving any rent for it?

Thanks in advance, I will go see a financial advisor but just looking to see if its a feasible plan at this stage

Thanks
 
Kilmainham Apt said:
I just point out my Dad fell into arrears when sick so no life insurance to pay off mortgage.
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Sorry, could you explain that?

Do you mean that because he was in financial difficulty he stopped paying the insurance premium?

Being sick or being in arrears on your mortgage is not relevant to mortgage protection as long as you are paying the insurance premium.

Brendan
 
Which lender?

Is your mother's mortgage in arrears?

Is she paying the interest?

What is the interest rate?

What age is she?

What is your mother's income?

It may be simplest to ask the lender to extend the term of the mortgage. If they agree to that, then you don't need to enter into complex financial engineering.

Brendan
 
Hi Brendan, it was in arrears of about 20K but we all chipped in and have cleared those. Shes 67 lender won't extend mortgage. Yes shes paying interest. Mothers income is pension only and rented out room in house for E800 p.m
Shes back in court next week but we expect once she keeps paying interest she'll be fine until lender wants the money in 2022. We've exhausted all options so only option left is for me to buy the house.
 
Brendan Burgess said:
Sorry, could you explain that?

Do you mean that because he was in financial difficulty he stopped paying the insurance premium?

Being sick or being in arrears on your mortgage is not relevant to mortgage protection as long as you are paying the insurance premium.

Brendan
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He had stopped paying insurance premium
 
Brendan Burgess said:
For something as serious as this you need to provide this information.

Information required for mortgage arrears and negative equity questions
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To be honest Brendan there's no point in filling all that out, we've reached the end of the line she's been in court numerous times, the only option is for me to buy the house in 2022 thats when the debt is due. They're happy she's paying the interest and has cleared arrears, the banks solicitor has been very understanding and has spoken up for her. She has representation, all this is going on a long time. I have the means to get a mortgage and buy the house then, it's just the all the tax implications I'm unsure of.
 
You want to buy the house worth €350k for €240k. On the face of it that is a gift of €110k from your mother to you and would use up part of your inheritance allowance. If your mother kept some type of right to live in the house that could justify a lower price but might cause problems getting the mortgage.

But will you inherit anything more in any case, from what you have said your mother hasn't the means to pay the mortgage off.

Allowing your elderly mother to live rent free in house you own could in theory create a tax liability, but I don't think Revenue would be interested.
 
cremeegg said:
You want to buy the house worth €350k for €240k. On the face of it that is a gift of €110k from your mother to you and would use up part of your inheritance allowance. If your mother kept some type of right to live in the house that could justify a lower price but might cause problems getting the mortgage.

But will you inherit anything more in any case, from what you have said your mother hasn't the means to pay the mortgage off.

Allowing your elderly mother to live rent free in house you own could in theory create a tax liability, but I don't think Revenue would be interested.
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Thanks yes my mother would live in the house until the end of her days. My mother can't pay mortgage and we've gone through all options with lender and the organisation who have been advising her. I was afraid revenue could go after her for living rent free when technically I'd have to get a buy to let mortgage but I won't receive rent. Apart from not want her to end up homeless, I want to buy the family home to keep it for my kids now my Dad has died, it means more now.
 
Am I right in saying that your mother owes the bank circa 240k and they only way you could stump up the money to pay off the bank is to get a mortgage, and the only way to get a mortgage is buy your mother house ?
 
It's very hard to give meaningful suggestions without the full story, but this screams at me...

Kilmainham Apt said:
Myself and spouse own 3 houses
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Sell one of the houses and lend the money to your mother to redeem her mortgage.

Leave the house in her name so that any increase in value will be exempt from CGT.

In theory Revenue could consider an interest free loan to be a gift, but it's unlikely that they would be too bothered.

Brendan
 
Do you have any siblings? They may not be too happy if you buy the house at a reduced rate.
 
Brendan Burgess said:
It's very hard to give meaningful suggestions without the full story, but this screams at me...



Sell one of the houses and lend the money to your mother to redeem her mortgage.

Leave the house in her name so that any increase in value will be exempt from CGT.

In theory Revenue could consider an interest free loan to be a gift, but it's unlikely that they would be too bothered.

Brendan
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I would sell one of my two investments but there's hardly any equity in them so just not worth selling, they're not even back to what I paid for them. We would work everything out with siblings as no one wants her homeless. I have no problem when the house is sold getting my percentage back and the remainder can be divided. I"m the only sibling in a position to buy it. We have a very good income and our main home is worth 800K and has very little mortgage left, my two investments have maybe 100K in equity max. and then after I pay CGT it's pointless selling them.
 
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OK, the simplest thing still might be to lend your mother the money to repay the mortgage.

So you could try to remortgage your own home.

But if that does not work, then buying your mother's home would be the best option.

Brendan
 
They want full payment of balance in 2022 so without getting a mortgage myself and buying house, I can't lend my mother that amount of cash. No other way to get it other then a mortgage
 
If we knew your mother's age...

As I said, you should fill out the full information, but I see that you don't want to.

Brendan
 
Kilmainham Apt said:
I was afraid revenue could go after her for living rent free
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No that's not a thing. You are not her employer there is no issue of benefit in kind. In theory Revenue could go after you for the rental income you should be getting from the property, but I really do not think that exists in the real world. Its your house, you let your mother live there. There is no tax aspect to that, in my opinion.

Kilmainham Apt said:
They want full payment of balance in 2022 so without getting a mortgage myself and buying house, I can't lend my mother that amount of cash. No other way to get it other then a mortgage
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You could get a mortgage yourself against your own home and lend the money to your mother to buy the house. Of course that raises the question of who would pay the mortgage and how you would get the money back
 
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