This is the “off the record” advice we got from a tax consultant when a had a family member do something similar.
As the nephew and his partner are maintaining the property and ensuring it doesn’t go into a state of disrepair you could easily argue a significant reduction in the market rate, say €500 a month/€6k a year which is the tax free gift allowable from the aunt to the couple.
Hi, thanks so much for the reply, interesting, in that case would they be better off getting some kind of rental agreement signed up with the aunt now which sets out the terms and within that agreement allow for the €10,000 to be in lieu of rent and backdate the agreement to Jan 19 when they moved in? Bottom line is that aunt didn’t want them to pay rent just mind her home and maintain however by doing that they’ve inadvertently caused a liability with free use of property
Thanks for any opinions
Personally I do not think an agreement is necessary if all parties are happy with the existing setup. The nephew should just hang on to receipts in case it is ever queried. Perhaps a one page note stating that in lieu of a market rate rent that the nephew will maintain the house and garden to a certain standard and pay all household bills. It may also be an idea to record that the nephew has no claim over the property regardless of the time he spends living there. It is unlikely the revenue will ever query this at they do not appear to be overly concerned with the issue at present. This could potentially change in the future all the same.
At present there are 2 houses (values circa €750k) sitting idle on my road where elderly owners have had to move into retirement homes. One for sure is under the fair deal scheme but I am unsure of the other. Having spoken to the family of the house that is required for the fair deal scheme they said that it is not worth getting tenants in for tax purposes and the hassle of being a landlord.
A Caretakers agreement text;
Caretakers Agreement
CARETAKER'S AGREEMENT
I,We
Of c/o
DO HEREBY ACKNOWLEDGE THAT I have been this day put into the possession of ALL THAT AND THOSE
as Caretaker, by and for and that I know I am in possession of said solely as such Caretaker of and for the said and not under any contract of tenancy re the possession of the said AND I HEREBY FURTHER ACKNOWLEDGE that I have UNDERTAKEN AND AGREED with the said to take care of the said for him, and to preserve same from trespass and injury and to indemnify the said against all costs, claims, proceedings or demands by reason or on account of my being in possession of the said property under this Caretaker’s Agreement and to deliver up the possession thereof to the said , his Heirs or Assigns, immediately when required so to do.
IT IS HEREBY AGREED AND ACKNOWLEDGED that the property has been completed to our satisfaction and that our snag list has been duly completed.
Dated day of
Signed ________________________________
Solicitor Witness.
Name ___________________________
Address __________________________
________________________________
_________________________________
Occupation ______________________________
Just thinking here...could there be a BIK issue here? Occupier has benefit of effectively free housing in exchange for services.
This is the “off the record” advice we got from a tax consultant when a had a family member do something similar.
As the nephew and his partner are maintaining the property and ensuring it doesn’t go into a state of disrepair you could easily argue a significant reduction in the market rate, say €500 a month/€6k a year which is the tax free gift allowable from the aunt to the couple.
Re: Jimjobjim's question above, would also like clarity on this, has anyone done this in the real world and whats the recommended approach?A. Would it be a case they pay €500 per month into uncles bank account and then Uncle has to pay tax on the amount? or B.
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