Good solicitor or accountant to help with complicated home purchase in Dublin

C

Callan

Registered User
Messages
7
Hi, we are looking into buying a house. We are not getting a standard mortgage due to bad credit rating we picked up at the tail end of the recession - missed several months payments due to lack of employment - however we have since cleared the outstanding balance and sold the house.

We recently have come into some money, and together with borrowing from my parents and my wifes parents we are going to buy with cash. However none of us know the best approach to tailoring the ownership of the house as we have a few complexities involved and both our parents have concerns, e.g. my wifes parents are happy to loan us the cash, but are concerned about gift tax implications (apparently there might be an exemption if we live in home ??); my parents would like to own a %, which they can leverage for future investments and have queries on this, also we want to know inheritance tax implications if we get their % in their will etc. We're also exploring buying in trust, but again don't really know the implications or set up process.

Basically we have a number of variables involved and queries from each party, and would just like to sit down with an expert to get some advice and assistance.

Thanks,
Callan
 
If this is to be your home then I think you are crazy to be thinking trusts, shared ownership to leverage other people's investments.

If it's your home, it's your home you don't need the rest of it.

A child can get up to €310k from a parent without Gift tax.

If your wife's parents don't want to gift her the money they you should have a solicitor draw up a loan agreement with set terms.
 
Hi Callan

I would say that you would get a good variety of ideas on askaboutmoney - probably more than you would get from most solicitors or accountants. It is probably a good idea to develop a proposal and when have that ask a solicitor to advise on it and implement it.

1) It is not a good idea to give your parents part ownership of the house. They will not be able to "leverage" it for other investments. They will be subject to Capital Gains Tax on any increase in value when it's sold.

2) There is no reason why you cannot buy the house as normal except that the mortgage is provided by your parents. Any solicitor will do up a mortgage agreement for you.

You will have two mortgages. You will have to agree the term. The interest rates, etc.

3) If you pay them interest at the market rate, there will be no CAT implications. If you pay them no interest, there would be a benefit in kind, but it would be well below the CAT threshold.

4) The biggest problem I see is that, unpleasant as it may be, you and your wife and your parents must make provision for what happens if you break up. It is impossible to get an order for possession in Ireland, so if your wife just digs her heels in and refuses to pay your parents, there isn't anything that they can do about it.

You should probably specify that if one party leaves the house, then they have the right to sell the house. Or just simply put in a clause in the agreement between your wife and you that either party can sell the house at any time on giving 3 months' notice.

5) Trusts have huge costs and tax disadvantages and have no role in 99% of family homes.

I suggest that you tell us the key numbers:

1) The purchase price of the property
2) The amount of cash you have
3) The amount to be lent by your parents
4) The amount to be lent by your wife's parents.

Brendan
 
Thanks guys, details are below
1) 410
2) 260
3) 50
4) 100

The gift tax for child is interesting and might be an option. Also sounds like a trust would not be appropriate in this case. We've considered to consequences of a break-up also, and would like to get something in place. Understand the value of AAM for this kind of advice, the issue I'm facing is my parents and my wifes parents are quite old school and always prefer to go through these issues face to face with a legal expert.

If you know of anyone who would be skilled in going through options like above please let me know of Private Message me if not comfortable notifying me on the thread.
 
Any solicitor will be able to talk you through the options and set up the two mortgages.

However, I think you should have a proposal to discuss with them first. They might amend your proposal.

But at those numbers, the risks to your parents aren't too high.

What term do you intend to repay the loans over?

Do you propose to pay interest? If you do, it will be taxable in their hands.

Revenue would have no interest in this transaction. They might have some interest in it, if the loan were written off.

If you propose to pay them off fairly quickly, you might not bother with the legalities of a mortgage. However, a mortgage would give some protection to your parents.

When the market returns to normal, it should be possible for you to take out a normal mortgage with a lender and replace those loans.

Brendan
 
Hi Callan

With a purchase price of €410k, and cash on hand of €260k, you have a Loan to Value (LTV) of 37% which is extremely low, and to your advantage. If the property is in or near the major urban areas somebody like Pepper Money would entertain a mortgage application from you, and you both could leave your parents out of it. A good mortgage broker also might be able to help.
 
You must log in or register to reply here.
Back
Top