Loan to daughter

[billdavies63]

I am retired with 200,000 on deposit in an Irish bank. My daughter has a 20-year mortgage of 175,000 and can't afford the repayments. I would like to lend her the money to pay off her mortgage and let her repay me at about 3% interest instead of 6%. Can I do this without problem of gift tax - I would of course pay tax on any interest?

 

[hippy1975]

Yes, it's a loan not a gift but in any case the parent to child threshold for gifts is somewhere up over 300k, revenue website will confirm

 

[vandriver]

As an alternative why not gift your daughter €40,000 to pay off the mortgage as a lump sum and get the repayment down to a similar amount as with your plan.Your daughter will have her lower repayment and you will still have a cushion against whatever life throws up in the future.

 

[billdavies63]

Thanks hippy and vandriver. reassuring.

 

[cl061969]

No, I would pay all her mortgage off. Only paying 40% is going to leave her open to the horrendous mortgage increases that are on the way. If you pay her mortgage in full, you are both guaranteed to have a roof over your heads. You should make arrangements tho, that if something happens to either you or her and the loan repayments are for the benefits for any other children you may have and that the property paid off, becomes your property (considering you paid for it). It will then revert back to everyone else later.

 

[Bronte]

You need to be very careful before you go 'loaning' your retirement monies to a daughter. Have you thought this fully through?

 

[bullworth]

if your daughter gets married or is married or God forbid passes away you may not get any of your retirement money back as someone else could inherit it from her. One solution could be to buy the house off her and allow her to live in it paying an 'affordable' rent but willing it to her ultimately or draw up an 'affordable' agreement to buy it from you . That way if anything unfortunate happens as outlined above at least you will have money coming in to provide for your retirement from whoever remains with rights to live in the house.