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Not paying tax on rental property/ declaring 'income'

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  • 14-05-2024 4:34pm
    #1
    Registered Users Posts: 624 ✭✭✭


    It is looking more and more like my mam will not be eligible for a mortgage. If I buy a house in my name for her and she pays the mortgage I will be liable to income tax won't I?

    I don't see that there is any exemption for just being the moron willing to take on the risks involved - of which I am aware there are many.



Comments

  • Registered Users Posts: 19,404 ✭✭✭✭road_high


    Sounds like a tricky one- whos name will the mortgage and deeds be in? Would siblings be entitled to a share in any future will (I would think so, but not a legal expert)- I would seek legal advice actually.



  • Registered Users Posts: 624 ✭✭✭heretothere


    The mortgage would need to be in my name. I guess I could put her on the deeds. I don't have PDH - Husband is a farmer and owned property when we got married so I can get a mortgage on this as a PDH.

    I am an only child so that bit at least would be straight forward



  • Registered Users Posts: 4,453 ✭✭✭FishOnABike


    Might not be as straightforward as you might think. You have no right, or guarantee, to inherit anything from a parent. I would get legal advice and ask about co-ownership as joint tenants or tenants in common.



  • Registered Users Posts: 13,264 ✭✭✭✭Geuze


    If you buy a house, and your mother lives in the house, and your mother pays you rent in return, then that rent is income in your hands.



  • Registered Users Posts: 102 ✭✭Hey2.Hey2


    … and if she lives there rent free (or anything that can be considered under the 'market value') then it'll be a taxable benefit in kind for her.

    I know there's some allowances for parents subsidizing their children's' rent (€3,000 annual gift exemption, for example) but no idea if that works in reverse.



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  • Registered Users Posts: 6,622 ✭✭✭SteM


    Will the bank allow you to put her name on the deeds to a property that has a mortgage held in your name? Say you were to stop paying the mortgage, how would they go about recouping their money if the deeds to the property weren't in the mortgage holders name?



  • Registered Users Posts: 624 ✭✭✭heretothere


    I don't know if I could put her on the deeds. I'm not sure what way that works. I think what would have to happen is that I get the mortgage, the house in my name and she just pays the mortgage. That is me taking on all the risk, so if I stop paying the mortgage the banks would come after me, and would eventually repossess the house. I have no desire for that of course!!

    I think I have my answer from @Geuze though it is rental income. I was thinking it would be. But I was hoping someone would say no there is a way around it. The only ways around it I can think of are not legal!

    @FishOnABike oh I know I have no right to inherit anything from her, she could leave all her life possession to the donkeys. But in the scenario the house would be in my name so it would already be mine. I am hoping she does eventually get a mortgage herself, I have saved €15k towards her deposit so far. I know that is a huge gamble to give to her as again - donkeys (more likely nursing home fees but that's fine) - but I am very worried about what will happen if she gets to retirement age and is still trying to fork out private rent. I live 3 hours away. She won't want to live here and I don't really want her to either.



  • Registered Users Posts: 13,264 ✭✭✭✭Geuze


    You can offer a reduced rent, or ask for no rent.

    You could use the annual 3k gift exemption to do this.



  • Registered Users Posts: 3,326 ✭✭✭phormium


    You will be getting a 'buy to let' mortgage for this not a pdh one as if it was deemed a pdh then your husband would have to be on the mortgage too. A family home mortgage most banks insist is in joint names when married, a BTL can be in a sole name. A BTL doesnt always mean it's actually rented, it could be a holiday home or what you are doing, it's just anything other than the family home.

    Can you put your mother on the mortgage as well? You would obviously be main earner from the income point of view but can't see why her name couldn't go on it, then she's responsible too and can pay the payments.



  • Registered Users Posts: 25,839 ✭✭✭✭Mrs OBumble


    Your farmer husband should have an accountant who is well able to help a rural family manage their affairs tax-efficiently.



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  • Registered Users Posts: 624 ✭✭✭heretothere


    @Geuze she's need to pay rent no way can I afford the repayments.

    @phormium thank you I didn't know that. What happens if I go into a mortgage with my mother, with me being married would my husband still need to be a part of it?

    @Mrs OBumble I'm an accountant myself - but not that type - his IT accountant is so hard to get a hold of. If any of this does come to fruition I will of course be getting full legal and accountancy advice (from the practice I trained in)



  • Registered Users Posts: 624 ✭✭✭heretothere


    In an ideal world I wouldn't be involved with this at all, my mam wouldn't be staring 60 in the face with zero thoughts of what will happen when she retires. I'm ''happy'' to give her the deposit money but not so happy about potentially getting my name on any official document



  • Registered Users Posts: 25,839 ✭✭✭✭Mrs OBumble


    Is she on the council housing list? Sounds like she should be.

    The Older-and-disabled list generally moves faster than the regular list so it may be an option.



  • Registered Users Posts: 3,326 ✭✭✭phormium


    No, husband only involved if it's the family home, it's a Buy to Let in the banks eyes even if not specifically for investment purposes, it's a catch all term for anything other than a PDH. That said though if there was a rate difference between BTL and PDH mortgage would they consider that it is your mother's PDH and apply the better rate!



  • Registered Users Posts: 340 ✭✭DFB-D


    Maybe explore putting the house in a pension scheme.

    The pension will be taxable when you recieve it, and you not easily might find a bank to lend for that purpose but it might suit your circumstances.



  • Registered Users Posts: 355 ✭✭Alan_007_


    Have you explored becoming a co-signer on the mortgage? No idea if it's even possible, but maybe worth thinking about.



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