What age can somebody legally collect rent?

Suckit

Long story short, my sister finds herself taking on her Godchild due to unforeseen circumstances.

The parents (Godchilds parents) left behind a house with a mortgage and they had no life policy or it was unpaid (I am unsure of the exact details there).

My sister is/was hoping to rent the house and give it her Godchild in 15-20 years time, but it now looks like there are more complications than she initially thought.

One being that, if she were to rent the house, her Godchild cannot be the landlord or receive any income.

Is there any alternative other than my sister becoming the default landlord (she would prefer not to sell it, and will try almost anything not to.), then paying a high tax on the income? I believe it is or close to 50%?
Also, what age can her Godchild be named as legally receiving income?

I think she is looking for a general direction to aim before taking on more expenses for the minute.

AnRothar

Suckit wrote: »

Long story short, my sister finds herself taking on her Godchild due to unforeseen circumstances.

The parents (Godchilds parents) left behind a house with a mortgage and they had no life policy or it was unpaid (I am unsure of the exact details there).

My sister is/was hoping to rent the house and give it her Godchild in 15-20 years time, but it now looks like there are more complications than she initially thought.

One being that, if she were to rent the house, her Godchild cannot be the landlord or receive any income.

Is there any alternative other than my sister becoming the default landlord (she would prefer not to sell it, and will try almost anything not to.), then paying a high tax on the income? I believe it is or close to 50%?
Also, what age can her Godchild be named as legally receiving income?

I think she is looking for a general direction to aim before taking on more expenses for the minute.

I always understood the mortgage holder would have first call on the house to clear the outstanding balance.
Anything else firms the deceased estate.
Who is the executor of the estate?

Proper legal advice is needed.

Suckit

AnRothar wrote: »

I always understood the mortgage holder would have first call on the house to clear the outstanding balance.
Anything else firms the deceased estate.
Who is the executor of the estate?

Proper legal advice is needed.

Thanks for your reply.

Yes, she has had some legal advice, but I think every day she is finding out more information. I think that is why she wants to find a direction of sorts before spending more money, as she thinks it may end up costing a lot.
I think she is the executor, I am not sure there was a will or anybody appointed until she was asked to do it (I think).
The mortgage holder would be the bank? Or her Godchild? Or my sister?
I think mortgage is up to date, but not the life insurance due to issues I don't know about.
I guess she was hoping to rent it out to a body, and have her Godchild be the recipient of all the rent, minus mortgage payments, but it looks like Godchild can not legally be a recipient until older but unsure of the age.
She has a meeting with somebody on Friday over zoom, but she is very stressed at the minute, not mainly for this, but also as the parents of the child were very close friends, so everything, Christmas, lockdown etc. getting to her.
We can't even really help at the minute except for whatsapp and zoom etc.

Marcusm

Suckit wrote: »

Long story short, my sister finds herself taking on her Godchild due to unforeseen circumstances.

The parents (Godchilds parents) left behind a house with a mortgage and they had no life policy or it was unpaid (I am unsure of the exact details there).

My sister is/was hoping to rent the house and give it her Godchild in 15-20 years time, but it now looks like there are more complications than she initially thought.

One being that, if she were to rent the house, her Godchild cannot be the landlord or receive any income.

Is there any alternative other than my sister becoming the default landlord (she would prefer not to sell it, and will try almost anything not to.), then paying a high tax on the income? I believe it is or close to 50%?
Also, what age can her Godchild be named as legally receiving income?

I think she is looking for a general direction to aim before taking on more expenses for the minute.

Your sister will need to establish what is in the will of the parents if any. if not, someone will have to become the administrator of the deceased estate and will have an entitlement under the Succession Act to appoint trustees in respect of the property. In default of that, the deceased's personal representative ends up with that function. The property can be let and any income arising would be treated as arising to the trustee or personal representative and taxed as such) until the minor comes of age or the property is to be vested (if a later date is provided under any will).

THis is not a matter of your sister being entitled to the income and being taxed on it in her own right.

Suckit

Marcusm wrote: »

Your sister will need to establish what is in the will of the parents if any. if not, someone will have to become the administrator of the deceased estate and will have an entitlement under the Succession Act to appoint trustees in respect of the property. In default of that, the deceased's personal representative ends up with that function. The property can be let and any income arising would be treated as arising to the trustee or personal representative and taxed as such) until the minor comes of age or the property is to be vested (if a later date is provided under any will).

This is not a matter of your sister being entitled to the income and being taxed on it in her own right.

She doesn't want any of the income at all, but was told that she would have to become the landlord or recipient (not sure who told her that, now that you have said that) until the child is older, which is making her think the main option would be to sell which she doesn't want to do.

I have tried looking but anything I have searched pretty much brings up 'what age can a child before they start paying rent' or 'when can parents start charging rent' which is the opposite of what she is looking for.

Move into the house and rent her own out maybe?

Honestly, I cannot understand such flippant planning for your children.

Suckit

Niner leprauchan wrote: »

Move into the house and rent her own out maybe?

Honestly, I cannot understand such flippant planning for your children.

That's not really an option unfortunately. She doesn't live near the same area and has her own kids (younger than the Godchild).

davindub

Unfortunately OP the only relevant question will be how the executor will clear the debts of the deceased from the estate.

The mortgage will not transfer to another party which would also rule out a trust.

clog

Your sister is probably entitled to claim Guardian's Payment from the Dept of Social Protection

Suckit

davindub wrote: »

Unfortunately OP the only relevant question will be how the executor will clear the debts of the deceased from the estate.

The mortgage will not transfer to another party which would also rule out a trust.

Yeah, thanks I guess I didn't really know what I was searching for, maybe just something that might be able to help. She will try to avoid selling it, but if little options I guess she will have to.

clog wrote: »

Your sister is probably entitled to claim Guardian's Payment from the Dept of Social Protection

Thanks, I'm not sure money is an issue with her, she is doing pretty well, I think tbh, she is more worried about everything else. Letting the child down, making a wrong move that she will only find out about in the future, and the sudden change and the reason for it, for everyone else, and the people she may depend most on for something like this are her Godchilds parents.
Hopefully she will get good advice on Friday.

Thanks everyone for replies.

Victor

Suckit wrote: »

Thanks, I'm not sure money is an issue with her, she is doing pretty well

You never know when money might be handy. If she wants, she can save it away for the benefit of the child.

Suckit

Victor wrote: »

You never know when money might be handy. If she wants, she can save it away for the benefit of the child.

I don't know the ins and outs of her financial status, but don't you have to qualify for something like that, earning less than x amount per year?

I had written a whole load here and just deleted it. I am realising as I am typing these posts, it is a lot tougher than I had thought.

runawaybishop

Suckit wrote: »

She doesn't want any of the income at all, but was told that she would have to become the landlord or recipient (not sure who told her that, now that you have said that) until the child is older, which is making her think the main option would be to sell which she doesn't want to do.

I have tried looking but anything I have searched pretty much brings up 'what age can a child before they start paying rent' or 'when can parents start charging rent' which is the opposite of what she is looking for.

How would she be a landlord of a house she doesn't own? If the child inherits then it goes to the trustee

Suckit

runawaybishop wrote: »

How would she be a landlord of a house she doesn't own? If the child inherits then it goes to the trustee

I may have mis-worded there. In fact, I definitely did. I don't know what the correct title would be. She understood that if she were to keep the house and payments on it etc. Then she would have to take over, but it would result in a much higher tax coming from the rent. I presume this stems from whatever issues the parents were in financially. But I don't know for sure.
So I took it upon myself to look up if there was any possibility that the rent could go straight to the child or rather not to her (as she doesn't want it for her self etc.) without the higher tax taking half of it.

runawaybishop

Suckit wrote: »

I may have mis-worded there. In fact, I definitely did. I don't know what the correct title would be. She understood that if she were to keep the house and payments on it etc. Then she would have to take over, but it would result in a much higher tax coming from the rent. I presume this stems from whatever issues the parents were in financially. But I don't know for sure.
So I took it upon myself to look up if there was any possibility that the rent could go straight to the child or rather not to her (as she doesn't want it for her self etc.) without the higher tax taking half of it.

The rent cannot go to her, it's not her house. She can act as an agent for the child, but that rent goes in trust for the kid.

Suckit

runawaybishop wrote: »

The rent cannot go to her, it's not her house. She can act as an agent for the child, but that rent goes in trust for the kid.

There was never any thought that the rent was going to her. She doesn't want or need it. Whomever she was speaking to today or yesterday said something to her.
I don't know the financial status of the parents.
I am getting the impression that it is a bit muddled.
I was just looking for alternatives to selling the house if I could find any.

runawaybishop

Suckit wrote: »

There was never any thought that the rent was going to her. She doesn't want or need it. Whomever she was speaking to today or yesterday said something to her.
I don't know the financial status of the parents.
I am getting the impression that it is a bit muddled.
I was just looking for alternatives to selling the house if I could find any.

You keep mentioning a high rate of tax, as in she'd be taxed. Or am I misunderstanding.

Rachiee

Id of thought that without life assurance the bank will insist on the sale of the house to recoup their debt, so it's unlikely that the child is even inheriting the house. If this is the case it's the lack of the parents foresight that will force the sale and nothing that the god parent can do about it so she should have no feelings of guilt, in be unable to protect her interests, it was the parents who failed in that right.

Suckit

runawaybishop wrote: »

You keep mentioning a high rate of tax, as in she'd be taxed. Or am I misunderstanding.

Maybe I am,.

Suckit

Rachiee wrote: »

Id of thought that without life assurance the bank will insist on the sale of the house to recoup their debt, so it's unlikely that the child is even inheriting the house. If this is the case it's the lack of the parents foresight that will force the sale and nothing that the god parent can do about it so she should have no feelings of guilt, in be unable to protect her interests, it was the parents who failed in that right.

Yeah, I'm not sure exactly.

There are certain things I can't/won't say here. But I think this is fairly accurate.

jimmycrackcorm

runawaybishop wrote: »

The rent cannot go to her, it's not her house. She can act as an agent for the child, but that rent goes in trust for the kid.

There is a potential tax issue whereby Revenue would classify it as income for her. Need to be careful.

Gingermac

When you say 'taking on', is your sister a legally appointed testamentary guardian or a trustee under a will? Or was there no will? Does she have a child care order? Is she fostering the child? All of these things make a big difference to your question. If there is a child care order, the state agency will likely help with sorting out the legal matters and the expense of that.

If the bank have been informed of the deaths of the owners, they may very well insist on the house being sold and they have first call on the proceeds of sale to pay the mortgage.

But if the house can be kept, essentially the house and its income need to be set up in a trust, for the benefit of the child. The trust income is taxable at the lower rate but she will have to sort out declaring the trust income and doing returns. She would have to do trust accounts in any case and keep them for future reference. In the same way as one would do a return for any rental income, she will be allowed to deduct the usual allowances.

She really needs to do some sums here, renting to pay a mortgage doesnt always work out, given the tax to be deducted, and all of the ongoing expenses, though of course it would be great if it could be kept as a trust fund.

nuac

Mod
This is a complicated position on which proper legal advice should be taken.
Closing thread