I'm separating from my husband. We bought a house in 2005 for €310k. €200k left on mortgage. It's worth around €250k today. He will live there and presumably at some point will buy me out. I will move with the kids to my parents house. They will move into a Granny flat next to the house (was always their plan as the house is too big for them) The house will need a substantial renovation to make it suitable for a family. It will need a kitchen extension, a bathroom put in downstairs, walls knocked inside, a bedroom made bigger upstairs, a new heating system...I could go on. I imagine I wouldn't see change out of 200k. Would the only way to fund this be if my parents took out another mortgage on the property and I paid them the repayments monthly? It has been paid off for years so I don't want them to have to do that. I also will be paying €1k a month to them to replace rental income they will lose as a result of losing the flat. What percentage of the value of the house I own with my husband would I stand to get if he bought me out? It would go towards the renovation. I earn €65k a year. I'm just trying to see how I could work this financially. Thanks
Separation and renovation
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NoRegretsCoyote
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You'd need to provide a few more details:
With Covid of course who knows.
- How old are you both?
- His income?
- Ages of kids?
- Are you on a tracker? How long left?
With Covid of course who knows.
The Horseman
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Unlikely you parents would get a mortgage at their age unless short term with high repayments.
Would you be inheriting house in future? If yes have same signed over to you now (assuming below inheritance threshold). If you pay your parents rent they are due to pay tax on same (after allowing for €3k yearly gift tax exemption).
Can your ex partner buy you out now? You will find it difficult to get another mortgage while already on one.
Would you be inheriting house in future? If yes have same signed over to you now (assuming below inheritance threshold). If you pay your parents rent they are due to pay tax on same (after allowing for €3k yearly gift tax exemption).
Can your ex partner buy you out now? You will find it difficult to get another mortgage while already on one.
Brendan Burgess
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How are they connected?
Brendan Burgess
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Have you reached a separation agreement with your husband?
At the moment, your equity, in simple terms is half of €50k or €25k.
If you have a tracker mortgage, you would argue that this should be increased.
But you need to agree now what happens. If he pays the mortgage for the next 10 years, will he claim full ownership?
A simple agreement such as "I will stay in the house and pay the mortgage" doesn't really work out that well for you.
Who is the lender? And what is his income? They might let him take your name off the mortgage if his income is over €60k.
If they don't, what happens if he stops paying the mortgage? Your credit record will be damaged.
If he can give you €50k cash now , it might be worth you giving up your claim to the home.
Brendan
At the moment, your equity, in simple terms is half of €50k or €25k.
If you have a tracker mortgage, you would argue that this should be increased.
But you need to agree now what happens. If he pays the mortgage for the next 10 years, will he claim full ownership?
A simple agreement such as "I will stay in the house and pay the mortgage" doesn't really work out that well for you.
Who is the lender? And what is his income? They might let him take your name off the mortgage if his income is over €60k.
If they don't, what happens if he stops paying the mortgage? Your credit record will be damaged.
If he can give you €50k cash now , it might be worth you giving up your claim to the home.
Brendan
The Horseman
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If the market rental income for the house was 13k the 3k yearly allowance can be offset the 13k therefore pay tax on the 10k.
No it can't.
A 'gift' in exchange for something else is not a gift, so it'd be taxed as income.
The Horseman
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Is this revenues rules I am curious ? If you gift a reduction in rent equivalent to the 3k rather than physically giving 3k in cash how does it differ.
The Horseman
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Just checked this out on Revenue please seehttps://www.revenue.ie/en/gains-gifts-and-inheritance/valuation-date-and-the-value-of-certain-benefits/free-use-of-property-and-interest-free-loans.aspx
Might be worth signing over house to daughter and she allows parents live rent free and avoiding any tax liability for them by availing of yearly gift tax allowance and group b inheritance thresholds between child and parent.
Additional benefit if parents need to avail of fair deal scheme once five years have surpassed from property transfer property is not assessable for fair deal scheme charges. I am open to correction on this as its being a while since I looked at this.
We are 42 and 44.
He earns €85k a year.
Kids are 11 and 9
Not on a tracker. 17 years left on mortgage.
The valuation is recent. It was in huge N.E but has recovered.
A lot to think about there. No agreement yet as Covid has put our plans of separating on hold. We were in counselling but I know the marriage is over.
The lender is KBC and he warns €85k a year. I know he will continue to pay the mortgage, but I would be happy enough to take the €50k and run. We're not on a tracker. We topped up our mortgage in 2007 to pay off debts to our parents, moved lender and lost our tracker.
My parents are reluctant to sign over their house. They're only in their early 70s and it's their security. The rent is their only income.
If I were them I’d be thinking the same. Your rent to them will come in under rent a room so will be tax free to them. Is the granny flat attached to the house.
Do your parents not get the state pension.
Your parents in no circumstances should apply for a mortgage. Luckily they won’t get it.
Why would you invest 200k in something you don’t own. If your current home is valued at 250k you might be better if buying your own house.
If the house was good enough for your parents why does it need such massive renovations.
Do you have siblings.
Whatever you do, do everything to get your name off the married hone. Including losing the 25k.
The Horseman
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Your parents could be tenant for life in property. You will own the property but they will have a roof over their head and you can never evict them. Protects the state having to house them.
At their age I would be surprised if they would get a mortgage.
The Horseman
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You can not avail of rent a room to direct family members eg parent to child or child to parent.
NoRegretsCoyote
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Monthly mortgage payment is €1250 or so I reckon which can be handled easily by him on €85k.
I don't know how you will arrange maintenance and custody. But if he has a higher income you may well get maintenance - that's an additional income stream that could help you get a loan to renovate property.
I have no knowledge of family law or how to structure ownership with your parents btw. Would be useful to know if you have siblings who will one day be expecting an inheritance too.
I don't know how you will arrange maintenance and custody. But if he has a higher income you may well get maintenance - that's an additional income stream that could help you get a loan to renovate property.
I have no knowledge of family law or how to structure ownership with your parents btw. Would be useful to know if you have siblings who will one day be expecting an inheritance too.
The Horseman
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Never thought of maintenance. Can't see a bank giving a loan to parents at their age or to op to renovate a property she does not own. If she defaults bank has nothing as security over loan.
Re family law, did this with my siblings and our own father and family home. Ownership changes hands but Father legally entitled to stay for as long as he wishes.
The granny flat is attached to the house yes.
Yes they get the pension but it's not much to live on.
The house I part own is not my home. I haven't lived in it for 10 years. Its not in a location i could live in in terms of distance to work, the kids schools etc. My parents house is.
I have a sister but my mother cut ties with her a long time ago. The will leaves the house only to me.
What benefit is it to me to get my name off the deeds if I come away with nothing? Genuine question. Thanks
That's interesting. I would look into that. They just want security. And I want it for them.
They also need an income. How much would the house rent for on the open market.
They would probably be better off renting for max under the rent a room scheme of 14k if they could get that and not pay tax on it. Which doesn’t apply to you as a daughter.
Then transferring the property to you with them retaining a legal interest, right of residence, as Horsemsn suggested might be an option for all of you. My late grandmother did that for my uncle as he was incapable of managing himself.