Need to buy house closer to parents because of Covid restrictions - how to do it tax-efficiently?

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LLB123

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Like many people because of covid restrictions I haven't been able to see much of my parents in their seventies who live down the country (I'm in Dublin).
Whenever I do get to see them, me and my family can no longer stay over at my childhood home and we all really miss being together - my kids especially who are missing all this time with their grandparents. Ultimately I feel the only option at this point is for me to buy a small place close by so that once the 5k restrictions are finally lifted, we have somewhere to stay from here on, as I get the sense that Covid is here to stay one way or another and given underlying health problems, vaccinations or not which they still haven't got, they will always be at risk. And they are very scared of catching it.

I suppose my question is; what's the most efficient way of doing this? While it's obviously a very personal decision at the moment, I'm also trying to think ahead as to any implications down the line. I could afford to buy something smallish outright (150k or so) but would it be better/more straightforward to borrow to do this, and maybe rent it out down the line in the future if no longer needed. Could I put it in one of the kids names as an investment vehicle for them in the future? Or from a tax point of view would it be considered a holiday home?
Just trying to consider the head v heart elements with it all at the moment. Thanks
 
Trying to do the same, except I was thinking of buying a site and building as I’d hoped it might be cheaper and would give my folks a bit of a boost/something to look forward to. The restrictions are really getting to them now and with no hotels as an option I think many families are in the same boat.
 
I don't think you should be making complex, long-term plans, when so much is unknown about the path of Covid.

When it's been raining for a long time, we just assume that the sun will never come out again. So it is with Covid.

It might take some time to return to normal. Maybe we will never be allowed to visit each other's homes again. But maybe the vaccinations will work and Covid will become history like the Spanish Flu.

If your parents have room, I presume that they would much prefer their grandchildren to stay with them when they visit. If you have a holiday home, then they will want to stay there.

So don't do anything for the moment. If it continues, then consider renting in the area for a while.

Brendan
 
Brendan Burgess said:
I don't think you should be making complex, long-term plans, when so much is unknown about the path of Covid.

When it's been raining for a long time, we just assume that the sun will never come out again. So it is with Covid.

It might take some time to return to normal. Maybe we will never be allowed to visit each other's homes again. But maybe the vaccinations will work and Covid will become history like the Spanish Flu.

If your parents have room, I presume that they would much prefer their grandchildren to stay with them when they visit. If you have a holiday home, then they will want to stay there.

So don't do anything for the moment. If it continues, then consider renting in the area for a while.

Brendan
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Thanks, but I suppose if nothing else it’s brought into focus that life is short, and my parents won’t be around forever either, so doesn’t feel so complex at this point, more the best solution so we can all spend more time as a family during Christmas summer/extended periods. They are in poor enough health that us arriving in to stay with them for longer visits is hard on them anyway, so having our own base would benefit us all in the long run, even after this crisis runs its course.
It’s a small rural town so there’s very little available to rent, especially for short term stays and no hotels in immediate vicinity.
So I’ve pretty much decided to buy a place, just trying to figure out the best way to structure it long-term?
 
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No one here can give you meaningful advice on how to buy this house without any information on your financial situation .

You need to consider how you can pay for this house and if you can afford it

If you have €150k to buy a house, is this your entire savings? If you buy it , have you any savings to fall back on if you need it - replace your car , house repairs or an unexpected bill

If you need a mortgage , will you get it based on your income , your current borrowing and ability to repay ?

Have you considered the running costs - insurance , bills

Forget buying it in the name of one of your children , you are overly complicating it for no benefit
 
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Can cash in share portfolio to buy, and I have more savings/other investments as a fallback. My current mortgage is small and very affordable so while I can afford to buy it outright, pretty sure I could get borrowings if needs be - I’m assuming it would be considered a holiday home as opposed to an investment property? Was thinking I could eventually use at it as a second pension of sorts if we rent it out down the line.
 
LLB123 said:
it would be considered a holiday home as opposed to an investment property?
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There is no difference from a tax point of view.

Keep it simple.

If you want to buy a house and you have the resources, then buy the house.

Do not borrow to buy it. This would effectively mean that you were borrowing money to invest in shares. That is not a good idea.

Unless the existing mortgage you have is a tracker, you should not have a mortgage while you have an investment portfolio.

Your objective is to buy a house so that you can visit your parents.

Then buy the house which best meets those needs. Forget about doing clever things from a tax point of view. And forget it as a pension.

Buy the house and then when you no longer need it, sell it.

Brendan
 
LLB123 said:
Thanks, but I suppose if nothing else it’s brought into focus that life is short, and my parents won’t be around forever either, so doesn’t feel so complex at this point, more the best solution so we can all spend more time as a family during Christmas summer/extended periods. They are in poor enough health that us arriving in to stay with them for longer visits is hard on them anyway, so having our own base would benefit us all in the long run, even after this crisis runs its course.
It’s a small rural town so there’s very little available to rent, especially for short term stays and no hotels in immediate vicinity.
So I’ve pretty much decided to buy a place, just trying to figure out the best way to structure it long-term?
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It does not make financial sense at all. As you point out, your parents are in poor health, so you'll end up dealing with two properties in a small rural town... You are basically investing 150k with at best a very poor rate of return if any and almost no chance of recovering your initial outlay.

But you are right, it is not a complex decision, all you have to do is decide if you are willing to burn off 150k or not.

Have you considered a camper? At least it will have some kind of marketable value in a few years time, when circumstances change.
 
Jim2007 said:
It does not make financial sense at all. As you point out, your parents are in poor health, so you'll end up dealing with two properties in a small rural town... You are basically investing 150k with at best a very poor rate of return if any and almost no chance of recovering your initial outlay.

But you are right, it is not a complex decision, all you have to do is decide if you are willing to burn off 150k or not.

Have you considered a camper? At least it will have some kind of marketable value in a few years time, when circumstances change.
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Yes I suspected as much myself, which is why I wondered if there was an element on the financial side to that I was missing to perhaps turn it into a positive investment.
Yes, we did consider a camper but my wife would be dubious about the driving/parking practicalities of it as our only vehicle while there!
Thanks all for replies and advice.
 
I can understand that you wanted to think through how best to do it but you should keep it simple .

If this will improve your lives and you can afford it , then go for it . You can always sell it when you don’t need it
 
If not a camper would a caravan be an option where you could just hitch it off while there ? Do your folks have a back garden. Kids would jump at the chance of camping and gives you breathing space to see how this pans out.
 
elcato said:
If not a camper would a caravan be an option where you could just hitch it off while there ? Do your folks have a back garden. Kids would jump at the chance of camping and gives you breathing space to see how this pans out.
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You run into planning issues with either the camper / caravan approach. If you want to occupy on-site you need planning, even storing you must move after 9 months.
 
Would it be possible to add a granny flat to your parents house with some type of arrangement with them
 
Leo said:
You run into planning issues with either the camper / caravan approach. If you want to occupy on-site you need planning, even storing you must move after 9 months.
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Interesting. Did not know this. Thank you.
 
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Hello OP....did you make any further decisions on this? Finding myself more and more considering something similar. None of the camper/caravan/granny flats would be an option and there is a real dearth of rental properties available, those that exist are of very poor quality. We now have the ability to work remotely so could see ourselves spending a lot of time in the next few years outside of our main residence.
 
If I was you I'd hold my horses for another year. We might have much more freedom from Covid in a year's time.
 
sadie said:
If I was you I'd hold my horses for another year. We might have much more freedom from Covid in a year's time.
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In a year's time?! I seriously hope so. Bad enough as it is that we're still stuck with nonsensical restrictions a year on. :rolleyes:
 
It would be crazy to buy a property within 5km because of covid. You do realise, if there are future restrictions, you won't be able to visit your parents anyway, especially if they are in bad health.

While this is the first pandemic in 100 years, there have been a number of epidemics in Asia over the last 20 years. They have come out of it and the world will get back to normal. Even in Ireland, they are projecting 80% will be vaccinated by the end of June. Your parents may be vaccinated already if they are in their 70's and bad health.

If you want to stay close to them, stay in a hotel. Locking up 150k for a property in rural Ireland for something you will only use occasionally is not a good use of money.


Steven
www.bluewaterfp.ie
 
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