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Paying large amount off mortgage

  • 09-06-2014 7:45am
    #1
    paddylonglegs
    Registered Users, Registered Users 2 Posts: 3,558 ✭✭✭


    Hi.

    I would like to get an outside view on a situation I am. In at the moment

    My partner and her brother own an apartment which has approx 200k left on mortgage. It is currently rented out.

    Their parents are about to sell up their own house. My partner and bro have suggested the parents move into the apartment. the parents would like to pay 100k off that mortgage also from the sale of the house. This will mean no income from the apartment as there will be no paying tenants

    The upshot of this is that the remaining part of the mortgage will need to be paid by partner and bro, adding to the strain of both having dwellings themselves.

    Is there another way of doing this so that it is not as financially taxing? I was thinking if the parents were to set up a separate account for the 100k which the mortgage could draw from, then at least this would give respite to paying 2 mortgages until the 100k runs out. The downside of this is the interest paid on the mortgage doesn't make sense.

    Are they better off just investing the 100k more wisely and not paying off a part of the mortgage instead?

    Sorry I know this is confusing but everyone in this situation just has it in their heads that it's the best way to go. I'm not convinced though


Comments

  • #2
    Mrs OBumble
    Registered Users, Registered Users 2 Posts: 26,290 ✭✭✭✭Mrs OBumble


    Are the parents dependent on the kids? If not (and maybe even if so) then there could also be tax implications in providing them with free accommodation. As in, they could be liable for tax on the value of what has been provided to them.

    Sorry - but I think having them pay off a lump sum of the mortgage without defining in advance whether this is a gift (liable for gift tax), purchase of a part share of the apartment, rent paid in advance (how long for) is just plain dumb.

    I'd suggest they need some proper advice about the legal, tax and financial implications, not just thought of randoms on the interwebz.


  • #3
    paddylonglegs
    Registered Users, Registered Users 2 Posts: 3,558 ✭✭✭paddylonglegs


    Mrs OBumble wrote: »
    Are the parents dependent on the kids? If not (and maybe even if so) then there could also be tax implications in providing them with free accommodation. As in, they could be liable for tax on the value of what has been provided to them.

    Sorry - but I think having them pay off a lump sum of the mortgage without defining in advance whether this is a gift (liable for gift tax), purchase of a part share of the apartment, rent paid in advance (how long for) is just plain dumb.

    I'd suggest they need some proper advice about the legal, tax and financial implications, not just thought of randoms on the interwebz.

    Thanks there. Wanted to get a different perspective. Sometimes the randoms are good at that! :)

    Parents aren't dependent on kids but will be retiring in a few years


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