TheBarbarian
New Member
- Messages
- 6
I wanted to get out of being a Landlord (my age, increasing legislation, RPZ and next government) and so I sold my (fully paid for) rental property to my daughter where she is now permanently living. This is her PPR and she is the sole owner. I have my own mortgage free home and sufficient income to live very comfortably.
The agreed sale price was the independent estate agents Market Valuation at Euro 600,000. My CGT was nil – small loss and has been reported to Revenue. (I realise this small CGT loss is only available to be set off against another transaction with my daughter and no one else). She paid her own independent legal and stamp duty costs separately.
She paid me Euro 200,000 in cash which she had on deposit account from her own savings.
I gave her a loan for the balance of the purchase price amounting of Euro 400,000. She would not qualify for a loan of this amount on her current salary. She is repaying electronically on a monthly basis a minimum Euro 1,800 per month direct to my current account. Monthly overpayments and lump sum repayments are allowed without penalty. It is not an interest free loan. Interest is calculated on a monthly basis and added to the loan. Term of the loan is expected to be approximately 25 years or until principal and interest is repaid in full. It is a written loan agreement (executed and witnessed by both our Solicitors at the time of sale) with some contingency planning in the event of her marriage or my death (the outstanding loan balance becomes part of my estate). All her siblings have full transparency and are aware of the loan and its conditions. All my children including my daughter are receiving the Euro 3,000 small gift exemption each year and this loan is a separate and unconnected with that small gift. We will be keeping track of the repayment amounts and interest rate charged on a spreadsheet. The interest rate is subject to change from time to time as required, in order to satisfy Revenue’s inter-family loan interest rate requirements and preserve her CGT / Gift Inheritance tax lifetime threshold. We are aware of the new Revenue CAT requirement to report the loan but as interest is being charged and paid we are exempt from reporting it.
For the past few years I have had well over Euro 100,000 in my current account earning no interest because deposit rates were so low. I really don’t want the hassle of opening deposit accounts online with foreign banks via Raisin for Euro 50,000 for 3 months or 20,000 for 6 months and all the tax reporting requirements. This would be a nightmare to do.
I believe that currently Revenue views the Loan arrangement from the viewpoint of the Lender and what the Lender could get from the prevailing “CALL” deposit rate on the market. Is this correct? Can I just use the call deposit rate from my local Irish Bank where I have my current account or do I have to calculate the various available Best fixed rate and various amounts from the online foreign banks?
I would like to know how to calculate what is the minimum rate of interest I can charge on the loan to satisfy Revenue’s requirements and preserve the Lifetime Threshold? I am aware I will have to pay Income Tax on the interest amount I receive each year.
The agreed sale price was the independent estate agents Market Valuation at Euro 600,000. My CGT was nil – small loss and has been reported to Revenue. (I realise this small CGT loss is only available to be set off against another transaction with my daughter and no one else). She paid her own independent legal and stamp duty costs separately.
She paid me Euro 200,000 in cash which she had on deposit account from her own savings.
I gave her a loan for the balance of the purchase price amounting of Euro 400,000. She would not qualify for a loan of this amount on her current salary. She is repaying electronically on a monthly basis a minimum Euro 1,800 per month direct to my current account. Monthly overpayments and lump sum repayments are allowed without penalty. It is not an interest free loan. Interest is calculated on a monthly basis and added to the loan. Term of the loan is expected to be approximately 25 years or until principal and interest is repaid in full. It is a written loan agreement (executed and witnessed by both our Solicitors at the time of sale) with some contingency planning in the event of her marriage or my death (the outstanding loan balance becomes part of my estate). All her siblings have full transparency and are aware of the loan and its conditions. All my children including my daughter are receiving the Euro 3,000 small gift exemption each year and this loan is a separate and unconnected with that small gift. We will be keeping track of the repayment amounts and interest rate charged on a spreadsheet. The interest rate is subject to change from time to time as required, in order to satisfy Revenue’s inter-family loan interest rate requirements and preserve her CGT / Gift Inheritance tax lifetime threshold. We are aware of the new Revenue CAT requirement to report the loan but as interest is being charged and paid we are exempt from reporting it.
For the past few years I have had well over Euro 100,000 in my current account earning no interest because deposit rates were so low. I really don’t want the hassle of opening deposit accounts online with foreign banks via Raisin for Euro 50,000 for 3 months or 20,000 for 6 months and all the tax reporting requirements. This would be a nightmare to do.
I believe that currently Revenue views the Loan arrangement from the viewpoint of the Lender and what the Lender could get from the prevailing “CALL” deposit rate on the market. Is this correct? Can I just use the call deposit rate from my local Irish Bank where I have my current account or do I have to calculate the various available Best fixed rate and various amounts from the online foreign banks?
I would like to know how to calculate what is the minimum rate of interest I can charge on the loan to satisfy Revenue’s requirements and preserve the Lifetime Threshold? I am aware I will have to pay Income Tax on the interest amount I receive each year.
