Anything stopping us doing this?

Buddy Bubs · 25-05-2022 9:48pm #1

I asked something similar in banking forum before but now looking like we might circumvent banks if possible, but I've research to do.

Fiances mother lives in a beautiful house, restored and habitable but it is a large 5 bedroom house and she lives on her own. Its a bit big for her now. It also has another fully self contained apartment on the land, where she would then live. All happy with this arrangement.

Value is approx 500k and the future mother in law wants one of her 4 daughters to buy it from her and split the funds in the following ways

100k for the herself

300k for the 3 daughters that don't buy it, 100k each, early inheritance

100k back to daughter that does buy it or 100k off purchase price, which would make it a 400k purchase in effect

Now, myself and fiance are getting married in June and we both have houses of our own. We live in hers and mine is rented out. I'm keeping my current house, that's not up for debate. Just covering myself to be honest.

The proposal now, and more or less agreed with all interested parties is that from our savings and equity in fiancé's house which would be sold, we could stump up 250k to the mother in law straight off.

This would be split in 100k to mother in law and 150k between the 3 daughters.

The 150k would be paid over a 10 year period to the mother in law at 15k per year who would distribute it to the other daughters, taking advantage of the 3k per year gift allowance along the way. In the event of her death it will be paid directly to the 3 daughters instead. So this needs some sort of legal agreement to be fair to everyone since the siblings are effectively lending us 150k. There would also be some form of additional payment made by us to cover an interest charge or we may agree a slightly higher price to reflect this.

As far as I can see there will be no tax liabilities for anyone as it will stay under thresholds.

amdublin · 25-05-2022 9:52pm

I think you should discuss with an accountant to get confirmation of no tax liabilities

https://www.citizensinformation.ie/en/money_and_tax/tax/capital_taxes/capital_gains_tax.html

Buddy Bubs · 25-05-2022 9:55pm

https://www.boards.ie/discussion/comment/119114515#Comment_119114515

Yep will get tax advice alright if we decide to go ahead, I have contacts in that industry

DubCount · 25-05-2022 10:17pm

Seems a very complicated way of structuring things. Just out of interest, why not get a 150k mortgage and buy out the other interested parties? Its looks like nobody is going to close to the CAT limit from an inheritance, so I think the annual gift allowance piece is a red herring.

Buddy Bubs · 25-05-2022 10:26pm

https://www.boards.ie/discussion/comment/119114638#Comment_119114638

Theres another 2 properties, a house in france and a house in west of ireland so the CAT will eventually be hit by them. We will get professional advice on this.

As for not applying for mortgage, jutst to keep the banks out of the picture really and do it amongst ourselves. Deeds of the house are in the family already why sign them back over to a bank for 10 years with a mortgage. And we all trust each other completely. I don't particularly want to move but she does and her want is much stronger than my indifference!

25-05-2022 10:28pm

I don't understand, they've all agreed that they'll take half of what the accepted value is and spread over that time at 0 interest? They're very accommodating.

standardg60 · 25-05-2022 10:32pm

The tax gift limit from child to parent is 32.5k, so that might stymie your plans.

mickdw · 25-05-2022 10:38pm

The plan is nuts.

The others will be letting you in to control the asset at very much reduced upfront cost.

What if you and partner fall out and your partner for example has nowhere else to go and perhaps couldn't afford to pay anything then due to loss of a second income. It would be a complete disaster.

There is also the possibility that one of the daughters might suddenly need to get their hands on the money and will come looking for quick cash.

Buy the house outright..... You are better dealing with a bank than 3 or 4 private individuals. The deeds are no more your own when you owe money to 3 people than owing it to bank.

Buddy Bubs · 25-05-2022 10:39pm

https://www.boards.ie/discussion/comment/119114686#Comment_119114686

No, I said in post we would make an allowance for interest. We are paying what we think is full market rate too, not looking for any favourable prices.

Plus their mother would stay in the family home, albeit in the granny flat/apartment. If this doesn't go ahead then the house won't be sold until their mother passes, she would just stay in it and she is only 63 so that could be many many years. They will get their 50k which will be very decent starts for them and an annual income for 10 years too. None of this would otherwise happen.

sprucemoose · 25-05-2022 10:42pm

https://www.boards.ie/discussion/2058247428/anything-stopping-us-doing-this

off topic but 'just covering myself' doesnt sound too promising

Bicyclette · 25-05-2022 10:43pm

Two questions which you need to think about:

What happens if your MIL needs to go into a nursing home and needs to take advantage of the Fair Deal Nursing Home Scheme? Any assets transferred within 5 years of someone using the scheme, will be taken into account in the assessment.
What happens when you MIL dies? You will need to look at how her apartment will be disposed of on her death. If it is sold to a stranger, will it devalue the original property.
Not a question, but an observation. Use two separate solicitors in the transaction, one for your MIL and one for you. This is to ensure there is no conflict of interest. And make sure you get three different valuations - take the middle one. This will cover you if there are any queries by others (family, Revenue, etc)

awec · 25-05-2022 10:45pm

https://www.boards.ie/discussion/comment/119114727#Comment_119114727

What am I missing here?

You say it's worth 500k, but you're only going to pay 250k, but you say you think you're paying market rate?

Buddy Bubs · 25-05-2022 10:56pm

https://www.boards.ie/discussion/comment/119114764#Comment_119114764

250k upfront

150k over 10 years

100k gift from mother to purchasing daughter by way of discount

500k

standardg60 · 25-05-2022 11:08pm

As i said you can't gift the Mil 250k without tax repercussions for her.

Buy the house for full market value mortgaging for 250k, Mil can then gift back 100k which you can pay off, leaving you with a 150k mortgage on a 500k house, what is the issue with that

awec · 25-05-2022 11:14pm

https://www.boards.ie/discussion/comment/119114807#Comment_119114807

Revenue will see this as you buying a 500k house for 250k. Some back of napkin calculations.

The sub-market value sale means 250k will be seen as a gift. Your partner has like ~330k a year gift allowance, but your allowance is roughly 16k (she's not your mother).

Since you're buying together, half of the gift will be allocated to you. That's 125k. Minus your 15k allowance, the 110k revenue will tax you on at 33%.

On top of this, your partner can give her mother 32k tax free, and you can give her 16k. So this 150k will also be taxed, it'll be 75k each, so 33% on 43k from your wife, and 33% on 59k from you.

Combined, you're looking at a tax bill of ~36,300 up front, and then ~33,600 over the 10 years.

Very messy. I'm not even sure how the sisters factor in to this either.

hayse · 25-05-2022 11:32pm

Johnny cash lads.

eusap · 26-05-2022 10:42am

Sounds like a recipe for disaster, buy it clean and then its yours. You will be surprised how many family's have fallen out over property.

What happens when your sister in law wants to stay in the "Family Home" for the weekend? you say no "but i still own my bedroom because you still owe me 50k"

Im getting married/buying a house/need a car, i need my 50k

When MIL passes away, i don't want my 50k anymore i will just keep the granny flat

Anything stopping us doing this?

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