Moneymakeover Sell former home while living rent free with dad?

Peanuts20 said:
if the father were to tie intestate, potentially they will be homeless
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That would be a concern for me for sure. Selling a second property which is a rental is fine when you also own your PPR, but not if you live in someone else’s property, and a change in their circumstances could result in you being homeless or ending up in the private rental market for the first time at an older age.

Also, wills can be changed at a later date, there can be a lien on a property if the owner avails of fair deal or the likes of spry, and wills can cause issues within families if some feel they were left out or treated unfairly. Nothing can be taken for granted. If things didn’t work out as expected, it’s not ideal to be looking for a new mortgage at late 40s or 50s with shorter mortgage terms plus high monthly repayments, or trying to find a rental when supply is so limited.
 
bipped said:
That would be a concern for me for sure. Selling a second property which is a rental is fine when you also own your PPR, but not if you live in someone else’s property, and a change in their circumstances could result in you being homeless or ending up in the private rental market for the first time at an older age.
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Yes - @Brendan Burgess covered these issues earlier in the thread in a few posts and concluded that the rental should probably not be sold. E.g.:
Brendan Burgess said:
If you lived in your own home which you owned outright or with a mortgage, the correct financial decision would be to sell your investment property as it would allow you to clear your other loans and contribute to a pension.

However, that is not the situation here.

Your father does not want you to sell your investment, and if you do sell it, there is a chance that you would be disinherited. So there really is no debate on it, you need to hold onto your investment. And as it happens, it's not a very bad investment.

Furthermore, you prefer your investment property as a home to live in and will move back when your father dies. So I don't really know why we are even discussing the potential sale. It's just not on the table for discussion.

Forget about pension contributions for the moment. Forget about your children's education for the moment. Focus on paying down your expensive debt if you can. When your father dies, sell his home, clear your debts and mortgage and you will be in a solid financial position.
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Hi All

The will is sorted and the house is willed to me. My dad will sign the house over to me whenever I want so as soon as I get the rental sorted I'll transfer over the house. I wanted to have enough money for legal fees and stamp duty ect. This inheritance will fall below the threshold so I shouldn't have to pay CGT on the inheritance. Guesstimate value of inheritance property €350,000 so stamp duty of €3500. Could you please take a look ay my figures below to see am I missing anything in my figures please. Many thanks,

Current Mortgage €231,619.22
Sell rental house for €400,000 (guess)
Profit €168,380.78
Tax free (original mortgage €265,000 - current mortgage €231619.22 = €33380.78)
CGT on balance - Profit €168,380.78-33,380.78 = €135000 @ 17% as house rented for nearly half of ownership = €22950 IS THIS CORRECT???
Profit after tax - tax free €33380.78 + (135,000-€22950)=€145,430.78

Some questions
1. What would a rough idea of figure for legal fees for selling rental and house transfer be?
2. Auctioneers fees will be 1% - 3% of sale price so if we sell for €400,000 it will be €4000-€12000 - I just googled this I would need to get an exact off auctioneer
3. Stamp duty on inheritance property will be 1% - €3500 if house valued at €350,000
 
The CGT doesn't depend on the mortgage but one the value of the property.
It's based on current value/sell price - (initial price + allowable expenses+ CGT exemption)
 
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stayorgo said:
2. Auctioneers fees will be 1% - 3% of sale price so if we sell for €400,000 it will be €4000-€12000 - I just googled this I would need to get an exact off auctioneer
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Estate agent fees in Dublin

Hi I'm selling my primary in Dorset Street, Dublin. It's where I've lived since 2002. It's being sold vacant possession. I've never sold a property before. I need to negotiate with some estate agents in the area. What terms should I look for ? The property is likely to sell for...
www.askaboutmoney.com
 
stayorgo said:
IS THIS CORRECT???
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Someone already posted an outline of how the CGT would be calculated so I'm not sure why you're ignoring that...?

Moneymakeover - Sell former home while living rent free with dad?

on paper we should have savings it just doesn't seem to happen so now you know why you seem to be "bad with money". The money is going somewhere. I'll double down on my Dave Ramsey's Baby Steps recomendation. https://youtu.be/OO25TrVo_dU?feature=shared
www.askaboutmoney.com
 
allowable expenses examples: solicitor fees to buy and sell the house, estate agents fees
CGT personal exemption: 1270 each (if you are both the owners)
 
stayorgo said:
Current Mortgage €231,619.22
Sell rental house for €400,000 (guess)
Profit €168,380.78
Tax free (original mortgage €265,000 - current mortgage €231619.22 = €33380.78)
CGT on balance - Profit €168,380.78-33,380.78 = €135000 @ 17% as house rented for nearly half of ownership = €22950 IS THIS CORRECT???
Profit after tax - tax free €33380.78 + (135,000-€22950)=€145,430.78
Click to expand...

As stated above, mortgages are irrelevant in CGT calculations.


Purchase cost = 265k plus any purchase expenses

Sales proceeds = estimated 400k less associated expenses

CGT is based on the (sales proceeds less purchase costs), and is then adjusted for time spent as your PPR.
 
You’ve made about €135k profit on the house which isn’t bad really. Hopefully you can get €400 for it. (Ignoring any costs of selling etc) so you’ll be able to get back on your feet now. Clear the debts etc.

Even after tax bill is cleared.

Bear in mind that if your dad needed nursing home care in the next 5 I think years, they will look back at the transaction when assessing him for payment.

A cousin of mine has just given away his half of the family home in the hopes of avoiding paying for his nursing home, I’m not sure that he will get away with that, he’s already living in the nursing home. But I’m staying out of it,
 
Hi All

I'm very sorry but I'm finding this CGT very confusing. I'm sorry Clubman I'm not ignoring what was said previously I had completely forgotten that CGT had been discussed upthread.

Many thanks for the link peanuts20 and I've used the calculator (guesstimating some figures like the conveyancing fees) and it says that the CGT due will be €19147. This is great news as its less than what I was expecting.

Thank you all so much for your help and patience
 
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