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Options to buy and tax implications

  • 05-02-2018 8:39pm
    #1
    quinne22
    Registered Users, Registered Users 2 Posts: 46 ✭


    Hi my wife's grandfather has a second house that he is interested in selling.

    He us currently in great health with full faculties.

    He has a few kids that all own numerous properties between them and have little interest in the property he is considering selling.

    We currently have a small deposit but not enough for a mortgage just yet.

    We were wondering would it be another option to say go to a solicitor and do up a legally binding agreement that we pay x amount a month for x amount of months/years with possibly paying over market rate till the deed then automatically signs over to us??

    Is this a viable option and if so what would the tax implications be? Or would we be better off saving for another year and hopefully get a mortgage for the property or a different property?

    Thanks in advance for any information.

    Mods feel free to move if in wrong sub.


Comments

  • #2
    scheister
    Registered Users, Registered Users 2 Posts: 1,310 ✭✭✭scheister


    quinne22 wrote: »
    Hi my wife's grandfather has a second house that he is interested in selling.

    He us currently in great health with full faculties.

    He has a few kids that all own numerous properties between them and have little interest in the property he is considering selling.

    We currently have a small deposit but not enough for a mortgage just yet.

    We were wondering would it be another option to say go to a solicitor and do up a legally binding agreement that we pay x amount a month for x amount of months/years with possibly paying over market rate till the deed then automatically signs over to us??

    Is this a viable option and if so what would the tax implications be? Or would we be better off saving for another year and hopefully get a mortgage for the property or a different property?

    Thanks in advance for any information.

    Mods feel free to move if in wrong sub.

    off the top of my head i'm wondering if this would be a loan type arrangement.
    So they sell you the house for say 200k. You pay the 200k over 20 years House becomes your day 1.

    Items to consider
    interest
    If no interest is paid you you will be treated as getting a gift of the notional interest.
    if interest is paid your wife's grandfather will have to pay income tax on the interest.
    If a lower interest is paid the treatment will be somewhere in the middle.

    Death
    What happens if your wife's grandfather dies before the loan is paid off. Will the balance be wrote off, this has CAT implications or could the estate call up the full loan and at the point get a mortgage from a bank to cover the amount.


  • #3
    quinne22
    Registered Users, Registered Users 2 Posts: 46 ✭quinne22


    scheister wrote: »
    off the top of my head i'm wondering if this would be a loan type arrangement.
    So they sell you the house for say 200k. You pay the 200k over 20 years House becomes your day 1.

    Items to consider
    interest
    If no interest is paid you you will be treated as getting a gift of the notional interest.
    if interest is paid your wife's grandfather will have to pay income tax on the interest.
    If a lower interest is paid the treatment will be somewhere in the middle.

    Death
    What happens if your wife's grandfather dies before the loan is paid off. Will the balance be wrote off, this has CAT implications or could the estate call up the full loan and at the point get a mortgage from a bank to cover the amount.

    Say we paid €1250 a month for 13 years. That would be €195k.

    If the grandfather did it as just a binding contract/agreement no loan etc

    What would be the tax if he lived till the agreement was fulfilled in terms of CGT and CAT and has this ever been done before in Ireland between family?


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