# Rent to buy family home from parents



## Breadman (15 Jan 2017)

This is my first post so I hope I am in the correct section. I am just looking for a bit of advice, I am living in the family home with my parents and have one sibling that lives abroad. My parents intend on moving to their holiday home in the country in the next year or two, I am single and would not be granted a mortgage on my own. 

Does anyone know is it possible to set up a rent to buy scheme with the parents or will there be a tax liability? 

My brother has no problem with me doing this as long as it is signed up in a legal agreement and God forbid if my parents passed I would just pay off the remaining balance to him divided equally. I hope this makes sense!


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## Joe_90 (15 Jan 2017)

Not sure what exactly your question is?

Can you make an agreement with your parents to purchase their house today? Yes.

Can you agree that you will pay them interest free over a period of time? Yes.

Can the agreement contain a clause that if both were to die then 1/2 the outstanding balance would be written off and you would pay the balance to their estate? Yes, will you be able to find this commitment.

If they have lived in the house as their PPR then there is no CGT.  If you are paying market value then there is no CAT.  Any future write off the CAT may apply.  The transfer will be stamped at market value.

The annual interest free loan is a gift but unless you are getting annual gifts from your parents then it should be covered by the €3,000 small gift exemption.


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## Brendan Burgess (15 Jan 2017)

The simplest approach would be for your parents to sell the house to you at market value - say €200k. 
They give you a loan for €200k i.e. a mortgage. 
So you owe them €200k. 
You pay this back according to a set agreement let's say €1,000 a month for 16 years and 7 months. 

When your last parent dies, their assets will be something like the following: 
Loan due from you €100k
Holiday home €80k
Cash €20k 

If they want to split this evenly between the two of you, then the Executor gives the cash and the holiday home to your brother. 

Make sure that whatever you agree, you do a full legally binding contract.  Make sure that they don't move to the holiday home, thinking that they will sort out the paperwork later. 

This leaves them and you very vulnerable. I have seen cases before where the parents and children have completely different memories of what was agreed 20 years earlier. 

Brendan


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## Thirsty (15 Jan 2017)

Assuming the parents remain in Ireland, is the 1000k per month loan repayment taxable as income?


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## Breadman (15 Jan 2017)

Hi thank you all for your replies, yes thirsty I am wondering would the 1000 per month loan repayment be taxable as an income?


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## Brendan Burgess (15 Jan 2017)

No, it's a capital repayment of a loan. 

The only tax implication is that the €200k interest free loan would be deemed to be a gift of interest from the parents to the son at 1% or €2,000, so it would be subject to CAT, but would fall below the €3,000 annual small gift allowance.

So no tax implications at all if the house is worth €200k.

If the house is worth €800k, the gift would be €8k which would use up part of the parent to child CAT threshold. So, in practice, no tax implications either. 

Brendan


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## Breadman (15 Jan 2017)

Thank you so much brendan for your advice.


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