Bailing out my parents?

Regy

Hey Guys,

Recently my parents fell into a tough financial situaution caused by job loss, illness etc, and as they were self employed they have no option to have their mortgage paid for a year, they have gone into the banks to get a moratorium, interest only option or discuss a deal to pay what they can afford for now.

They owe 60k on the house. The house is a nice house in a nice location and is worth 240k (recent evaluation).

I have a house, have very good credit, a good enough job.
I want to know is it possible to buy my parents house at the 60k and have it over 28yrs, (remainder of my mortgage) and thus reducing the burden on them.

Legally i would be a part owner only as they have paid the majority on the house. So.. what are the tax/other implications i would be subjected to if i was to help my parents?

When they get some money together they are willing to help out in payments until such time as the market goes back up and they sell the place, and i get my money back.

Any advice appreciated

D3PO

Firstly nobody thats unemployed gets thier mortgage paid for a year. Wherever you got that notion from is beyond me.

Options as I see it

1) They sell up. Pay off the 60k and use the remaining money to buy somewhere else and to be mortgage free.

2) You release equity in your house if you have it and gift them the 60k. They might have a taxable liability on that. Normally the threshold from a son to parent is €33,208 but sometimes it qualifies for a higher threshold of €332,084. If you were going this route Im sure you could clarify with the revenue beforehand.

3) You get a mortgage and buy their property for 60k. You would have a stamp duty liability, and in future a CGT liability if you sell it on.

I dont think you can buy into a share of the house.

anyway back to your first post if it is their intention to sell up at some point its ludacris for them to wait for the market to "go back up" do do so.

Both from the perspective that its not ever going to "go back up" in a way that does anything but match inflation so you might aswell have the money in the bank. and secondly their financial situaiton dictates that this is ludacris given their current position.

Damie

Regy wrote: »

When they get some money together they are willing to help out in payments until such time as the market goes back up and they sell the place, and i get my money back.

Any advice appreciated

Goes back up where? Do you not realise the ****t we are in as a country? Seriously, are people still deluding themselves about the property 'market'?!

Marcusm

Regy wrote: »

Hey Guys,

They owe 60k on the house. The house is a nice house in a nice location and is worth 240k (recent evaluation). ...
Legally i would be a part owner only as they have paid the majority on the house. So.. what are the tax/other implications i would be subjected to if i was to help my parents? ...

Any advice appreciated

Ignore the suggestion that you can't only part of the house, of course you can.

I think you should try and work out if you want to bridge them over a short term joblessness position or want to get yourself in the middle of this forever.

If the former, why not simply lend them the money to make the mortgage payments or, if they avail of the moratorium, for only the interest element.

If you want to get involved for the full term, evaluate whether their loan rate is better than you could obtain. If it is, you might be better acquiring an interest in the property (equitably) and indemnifying them against the mortgage payments. Note that in such circumstances you would not be able to be registered as a part owner as this would likely invalidate the mortgage loan (by diluting the bank's security). If you can borrow as cheaply, purchase 25% or greater share f th property from them. I suggest greater as you will not occupy the property when you acquire your share while they will. There should not be any CGT or CAT implications for them. Stamp duty (if any) should be minimal and you may be able to use a single solicitor so long as they are satisfied that there is no conflict or undue influence. You would likely find it difficult to raise debt secured on your 25%+ of the house and you should be wary of raisingit on your own home.

D3PO

Marcusm wrote: »

Ignore the suggestion that you can't only part of the house, of course you can.

.

I didnt say you cant I said I dont think you can. theres a difference try reading whats written before replying. Plus its not a suggestion its a comment :rolleyes:

rather than rubbishing another post perhaps you should stick to posting on the OP's options

NIMAN

D3PO wrote: »

Firstly nobody thats unemployed gets thier mortgage paid for a year. Wherever you got that notion from is beyond me.

I would if I lost my job.

Its unemployment protection insurance.

MagicMarker

NIMAN wrote: »

I would if I lost my job.

Its unemployment protection insurance.

It's payment protection insurance, and there are T&C's.

D3PO

NIMAN wrote: »

I would if I lost my job.

Its unemployment protection insurance.

Firstly is payment protection and secondly thats not what is referenced in the first post as being self employed or otherwise has no bearing on weather you can take a payment protection policy.

antoinolachtnai

What you really need to do is figure out a long term position on this. The problem with owning part of a house is how you are going to get a return on that money, or how you are going to buy the rest of the house out. If you own a quarter of the house, for example, are they going to pay you a third of what a commercial rent would be? If they aren't, then what happens? Is your percent ownership of the house going to gradually increase?

You need to work out valuations and so on. Tax-wise, I think it is just like owning a rental property. You pay tax on the income from it. But I could be wrong. You need to get professional advice.

If your parents have run out of money they should be able to claim unemployment assistance and housing assistance, which should help with the interest bill. I do know cases where this has been done.

60k is very manageable compared to stuff I have heard, there should be a way to work this out.

BrianBlessed

D3PO wrote: »

I didnt say you cant I said I dont think you can. theres a difference try reading whats written before replying. Plus its not a suggestion its a comment :rolleyes:

rather than rubbishing another post perhaps you should stick to posting on the OP's options

Perhaps if someone comes here asking for help and you don't know what you are talking about you should keep quiet.

That's not a suggestion by the way, just a comment

Regy

I dont know what to long term, just looking for options on the easiest way out. I know the markets will never go back to what they were, slip of the tongue, i would like to help them but not cruscify myself, for the last few months i have been helping them out as they are working on gettin my moms disability sorted, ,my dads looking for work. I have been paying all of their mortgage of 580e pm and i have my own of 640e pm, im crippled, my dad contacted the banks about an interest only option recently but as he was sele employed during this year he must submit his accounts, pay his final year tax and tie up any loose ends before the banks will deal with him , but.... he has no money to do this, catch 22!

If he got the interest only option for a while it would give me breathing space to organise myself, just living from week to week, i have 2 people living in my ppr, and was considering the idea of moving back home, sharing bills and renting my house out fully.. i dono,

antoinolachtnai

Why don't you just stop paying your parents' mortgage? That will ease the pressure for you and your parents. Have your parents got help from the social welfare to continue paying the interest?

I would be surprised if you could really make more money post-tax by leaving your PPR. Moving back into your parents' home in this situation seems like a very bad idea.

StillWaters

Familiarise yourself with the Mortgage Arrears Resolution Process, and visit the bank with your parents to insist on them being part of it. They will have to be in arrears first though.

Personally I think it would be foolish to get into the messy situation of buying part of the house.

If its worth 240 now, they should consider selling, buying something smaller and more suited to their needs with cash.

Diddler1977

Regy wrote: »

Hey Guys,

Recently my parents fell into a tough financial situaution caused by job loss, illness etc, and as they were self employed they have no option to have their mortgage paid for a year, they have gone into the banks to get a moratorium, interest only option or discuss a deal to pay what they can afford for now.

They owe 60k on the house. The house is a nice house in a nice location and is worth 240k (recent evaluation).

5

Legally i would be a part owner only as they have paid the majority on the house. So.. what are the tax/other implications i would be subjected to if i was to help my parents?

When they get some money together they are willing to help out in payments until such time as the market goes back up and they sell the place, and i get my money back.

Any advice appreciated

I imagine buying your parents house for less then it is actually worth would be viewed by Revenue as tax evasion????

Caoimhín

Regy wrote: »

When they get some money together they are willing to help out in payments until such time as the market goes back up and they sell the place, and i get my money back.

Any plan or arrangement, even with the compliance of the bank, if based on this assumption, will not end well.

StillWaters

Besides which, it makes no sense, any place they downsize to will have risen in value also.

It is admirable that you want to help out your parents, but not at the expense of crippling yourself.

As I see it the best course of action as they cannot afford mortgage repayments is to go into arrears and enter the MARP process. The bank MUST then negotiate with them and cannot invoke legal proceedings. They are not going to lose the house if they engage with them, and pay something.

You can help out with groceries, ESB bills etc.

Icepick

They might need to move to get a new job anyway so the best option for them is to sell it and rent till they find a job.

Jerri Jordan

would your parents be in a position to rent out 2 rooms in their property to cover the mortgage. I know its an awful situation but if they did that for one year they might have their heads back above water by then.
They could make it clear anyone answering the ad is renting a room and not the entire house. They get use of kitchen and bathrooms but not living room.
I think your right to help them, I would do the same myself.