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Does this make sense?

  • 04-09-2018 7:52pm
    #1
    august12
    Registered Users, Registered Users 2 Posts: 1,275 ✭✭✭


    Have gone sale agreed on a second house, own our principle residence, family member will be living in the second property, would it make sense or is it possible to re mortgage principle residence and buy the second property outright, can someone list the advantages/disadvantages.


Comments

  • #2
    JimmyMW
    Registered Users, Registered Users 2 Posts: 695 ✭✭✭JimmyMW


    august12 wrote: »
    Have gone sale agreed on a second house, own our principle residence, family member will be living in the second property, would it make sense or is it possible to re mortgage principle residence and buy the second property outright, can someone list the advantages/disadvantages.

    First off I am not sure why you would want to put your PPR at risk over a second rental property, to me if possible I would clear my PPR and land all the risk on the second property.

    Is the second house going to be generating rent from the family member? If so I believe you can put 75% of the interest on the mortgage against your tax or at least that is the way it used to be.

    I honestly cant see any advantage on what you are suggesting, am I missing the point here? Why do you think this is a good idea?


  • #3
    august12
    Registered Users, Registered Users 2 Posts: 1,275 ✭✭✭august12


    JimmyMW wrote:
    I honestly cant see any advantage on what you are suggesting, am I missing the point here? Why do you think this is a good idea?

    I don't know if there is any advantage to be honest, hence the reason for me posting here. Thanks for your reply, I welcome any feedback on this. Just to note, PPR is mortgage free, family member will be covering most of the mortgage, there will be no formal/rental arrangement, will have no issues as trust this person completely, the mortgage in this case is a buy to let which is quite a bit more expensive than residential, quoted rate is 4.5%.


  • #4
    JimmyMW
    Registered Users, Registered Users 2 Posts: 695 ✭✭✭JimmyMW


    august12 wrote: »
    I don't know if there is any advantage to be honest, hence the reason for me posting here. Thanks for your reply, I welcome any feedback on this. Just to note, PPR is mortgage free, family member will be covering most of the mortgage, there will be no formal/rental arrangement, will have no issues as trust this person completely, the mortgage in this case is a buy to let which is quite a bit more expensive than residential, quoted rate is 4.5%.

    Sorry I am not quite following you there, are you proposing to get a mortgage on a property, have someone else pay it predominantly but its in your name? Given on paper you will own the property the family member will be paying you rent ie mortgage payments, which is therefore taxable, this will be the case in both situations above weather the PPR or the second property is mortgaged.

    What will happen when the mortgage is paid and you own the property? Are you planning on gifting them the property then? This may be subject to CGT depending on the value of the house, your relation with the family member and previous gifts given.

    I am assuming this is being proposed as the family member will not qualify for the mortgage on their own? It may be cleaner to essentially halves with them and get a joint mortgage with them, pay for half of it and own half of it.


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