Loan to daughter

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onlyonpaper

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Please excuse if this query is in the wrong location; My daughter has approx 1 yr left on mortgage. She has now identified another house she would like to purchase as current one is too small for her growing family. To help her situation I was considering lending her the money (over 200k) to purchase the new house. That will give her the time to sell her current home, pay off the outstanding mortgage and organise a new one ( approx 6-9 mths). She lives in an area where houses have been selling quite quickly.I would then be paid back the money I would loan.

Could I get some advise please on the Revenue,Gift tax implications of doing this if any.
 
So you are proposing the following -

1) You lend daughter €200k
2) She buys new house with cash
3) She sells existing house in time
4) She pays off mortgage with proceeds of sale
5) She remortgages new house to repay you

There are almost no tax implications of this. Your daughter would be assessed for gift tax (Capital Acquisitions Tax) on the interest on the loan. As it's well within the mother/daughter threshold, no tax would be payable. I don't think you would even be expected to report such a short-term loan.

However, I see a problem with Step 5 - lenders are not doing remortgages at the moment. She will be applying after she has bought the house, and the lender will probably say no.
 
You could try the following

1) You lend daughter €200k
2) She pays off the mortgage on her existing house
3) She buys the new house with a mortgage
4) She sells her existing house
5) She repays you from the proceeds of sale

I think she will find it easier to get a mortgage this way.

However, if the lender refuses her a mortgage, then she will be stuck in her old house and will not be able to buy the new house.

Overall, I think that your daughter should sell her own house first before buying a new house.
 
Two other options.

Option 3
1) You buy the new house
2) Your daughter sells her existing house
3) She buys the new house from you - easier to get a mortgage this way.

Downsides - legal fees and stamp duty.

Option 4
Could you give the money to a solicitor who would buy the new house in trust for your daughter? They would convey it to your daughter when she gets mortgage approval. Not sure if this works as I don't know how long a solicitor can keep a house in trust.
 
Thank you for further update. I replied too quickly above.We have solicitor that we have used for years so there would be no harm in asking them.It is also possible to test the mortgage lender as she was very effecient with her old mortgage but I'm probably naive saying that in current environment. Her provider is PTSB
 
Does she have a cheap tracker?

Is there any way to keep it?

Or could she just buy the house with your money and keep the old house which is probably a good investment, if she has a cheap tracker?
 
She has an excellant tracker ECB+0.8%.She had a 200k mortgage but paid off over half with a redundancy payment a no. of years ago and has been "overpaying for past no. of yrs to complete and now has approx 1 yr left. I cant see them in the wide world extending those terms to her.

Thank you for your help. You have give us a no. of options and cleared up the issue of tax implications
 
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