Advantage of Owning House in Dundrum at 23

Glacier

My parents are both deceased, the mortgage was cancelled when my father died & I inherited the Family home. It's probably worth about €750,000.
I just finished college and haven't really started working yet, but how much would I be able to borrow if I wanted to move. I have no experience in these matters as I'm still quite young. Anyone have any idea?
Thank You

Ace2007

did u pay 70K in inhertiance tax...

connundrum

I would imagine that whatever you borrow will be calculated on your ability to pay back, regardless of what fixed asset you put against a loan.

2 options are:

Sell the house and buy a smaller house in a different area for a much lower price, thereby releasing money directly to you and cutting out the need to borrow.

Start working and see what a lender will offer you based on the guarantee of the house.

Moonbeam

You wouldn't need to borrow just sell it and move,otherwise they will let you borrow on the equity of that house but do wait until you have a job first if you want to keep the house that you inherited.

Glacier

Would you pay much tax on selling the house, how does that usually work?

Moonbeam

check out www.revenue.ie

podge018

Sell it, move to Peru and live like a king!

Nermal

Stay in the house for a further five years and you'll be entirely exempt from tax.

Ace2007

i mean - if u inherited the house - u would have had to pay inheritance tax

Ace2007

Nermal wrote:

Stay in the house for a further five years and you'll be entirely exempt from tax.

whats this about??

PeakOutput

i have no idea about the legalities of this BUT

you should rent out the house you are in now (i assume its 3/4 bed) you should get maybe 1500 a month for it??????

then you should use this income and the income of whatever job you get to get a mortgage and buy a bigger house than you need and rent out the spare rooms or a house just as you need and not rent it at all. the rental income from the house in dundrum should cover alot of your mortgage per month.............

obviously there are downsides to being a landlord but this is what i would do.

PeakOutput

Ace2007 wrote:

i mean - if u inherited the house - u would have had to pay inheritance tax

are offspring not exempt and its only if you are further removed from the deceased that you pay inheritance tax???

Zaph

As long as the following conditions are satisfied there should be no Inheritance Tax to be paid:

Section 151 of the Finance Act 2000 inserts a new section 59C into the
Capital Acquisitions Tax Act, 1976. It provides that gifts or inheritances of a dwelling-house taken on or after 1 December, 1999 will be exempt from
capital acquisitions tax provided the following conditions are complied with-

(a) the recipient must have occupied the dwelling-house continuously as
his or her only or main residence for a period of 3 years prior to the
date of the gift or inheritance.Where the dwelling-house has directly or
indirectly replaced other property, this condition may be satsfied where
the recipient has continuously occupied both properties as his or her
only or main residence for a total period of 3 out of the 4 years
immediately prior to the date of the gift or inheritance;

(b) the recipient must not, at the date of the gift or inheritance, be
beneficially entitled to any other dwelling-house or to any interest in
any other dwelling-house, and

(c) the recipient must continue, except where such recipient was aged 55
years at the date of the gift or inheritance or has died, to occupy that
dwelling-house as his or her only or main residence for a period of
6 years commencing on the date of the gift or inheritance. Where the
dwelling-house is directly or indirectly replaced by other property, this
condition may be satisfied where the recipient continuously occupied
both properties as his or her only or main residence for a total period of
6 out of the 7 years commencing on the date of the gift or inheritance.
A recipient absent during any time through working abroad is
considered to remain in continuous occupation of that dwelling-house.
The exemption will not be withdrawn where a breach of the condition
referred to at (c) above is as a result of the recipient requiring long term
medical care in a hospital, nursing home or convalescent home or as a
result of a condition being imposed by an employer on a recipient to reside
elsewhere.

More details here

If Inheritance Tax is to be paid, it's at a rate of 20% on anything over €496,824 (or €478,155 if inherited in 2006). More details here

My advice would be to talk to an accountant or tax specialist before you do anything to find out what your position is in respect of your various options.

Victor

You could avil of the Rent-a-Room scheme now and earn up to 7600 euro per year tax free (you have to declare it though). See www.revenue.ie

Glacier

Is a Tax Specialist the same as a solicitor? Who would be the best person to talk to for my Situation?

Victor

Glacier wrote:

Is a Tax Specialist the same as a solicitor? Who would be the best person to talk to for my Situation?

"Tax Specialists" are usually accountants but working typically working in legal firms. Several of the medium to large legal firms have a separate department that only deals with tax law and associated accountancy issues.

stepbar

The most tax efficent thing to do would be to do an equity release against the property you own. That way you can claim interest relief. Maybe buying a house with some Tax Insentives left on it might be the best way to go. That way would could offset any tax you pay against your total income i.e rental income (dundrum and other house / rent a room (dundrum). I think you can do this, but I am open to correction.

Victor

stepbar wrote:

The most tax efficent thing to do would be to do an equity release against the property you own.

Are you sure that these are compatible?

stepbar

You can definatly release equity (re - mortgage might be a better word) on an unencumbered house. If you add in the rest I would say its fairly tax efficent. Can someone confirm that it can be done?

Glacier

Unencumbered House? I don't understand, explain these things to me.

Victor

Glacier wrote:

Unencumbered House?

No mortgage or other conditions attached to the ownership title of the house.

321

stepbar wrote:

The most tax efficent thing to do would be to do an equity release against the property you own. That way you can claim interest relief. Maybe buying a house with some Tax Insentives left on it might be the best way to go. That way would could offset any tax you pay against your total income i.e rental income (dundrum and other house / rent a room (dundrum). I think you can do this, but I am open to correction.

I thought you could only claim mortgage relief on equity releases if the funds are used to purchase or improve the property motgaged.

the best advice if probably for the o/p to seek professional advice.

The_Conductor

321 wrote:

I thought you could only claim mortgage relief on equity releases if the funds are used to purchase or improve the property motgaged.

Thats the theory. In practice I've never heard of any inspections occurring- though there is a provision there for this to happen.

Glacier

My parents died & I inherited the family home. What are the main advantages of owning a house in Dundrum? I know I would save money when I got older or could upgrade sooner than most, but what would be the best way to make the most of my situation?

stepbar

No offence dude but I would have thought it would have been fairly obvious. Did you talk to a financial / tax advisor yet?

Silverfish

http://www.boards.ie/vbulletin/showthread.php?t=2055123417

Probably best to keep this to the thread posted already, but I would say talk to an advisor.

Glacier

stepbar wrote:

No offence dude but I would have thought it would have been fairly obvious. Did you talk to a financial / tax advisor yet?

No, why? What do you think is obvious?