# Sibling buying family house under market value with parents staying put too.



## shaaarn (2 Sep 2020)

Reaching out for some advice on this one please.

I'm the eldest of 4 children. My parents are in their 70's but still of relatively good health and have a property in Mayo that they built 25 years ago (at a cost of 60,000 punts). I estimate this house is currently worth a little over 300,000 euros.

My sister lives abroad and wants to buy the house from my parents for 200,000 euros as she wants to move back to Ireland at some point in the future. She says that my parents can continue to live in the house until their dying day without any cost and she is planning to live with them. There is talk about her caring for them if they become ill  but I'm not sure how this can be enforced.

I'm not sure how relevant this is at this stage but they have a will and their estate is split 4 ways equally amongst their children.

My parents want to take this offer from my sister despite it being below the market valuation. They are not willing to get it independently valued and will not allow any of the other children a fair chance to buy it. Their minds appear to be made up and I recognise that it is their house and they are free to do whatever they want with it.

This doesn't get away from the fact that one of the children is getting a cut down price on the original family home and I want to understand the following:-
1. What tax liabilities will my parents face?
2. What tax liabilities will my sister face?
3. How can the rent free and carer conditions be solidified? 
4. Do I have any rights to intervene?
5. Is there anything else I should be aware of please?

I appreciate your time and thank you in advance.
shaaarn


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## Brendan Burgess (2 Sep 2020)

shaaarn said:


> I recognise that it is their house and they are free to do whatever they want with it.



Correct and bear this in mind all the time. 



shaaarn said:


> 1. What tax liabilities will my parents face?



None. They are selling their family home. No CGT or any other taxes.



shaaarn said:


> 2. What tax liabilities will my sister face?



None.  It would be treated as a gift of up to €100k, but parents can give children gifts up to €330k before CAT kicks in.



shaaarn said:


> 3. How can the rent free and carer conditions be solidified?



Your parents are extremely unlikely to insert a clause in the contract that the daughter is to look after them. 

In cases like this, after the mother gets elderly and needs constant care, the daughter will tell the other siblings to do their duty and look after her or else they will shift her into a home.

And of course, the daughter's partner or husband will probably want this done anyway. 




shaaarn said:


> 4. Do I have any rights to intervene?



No. Unless you think that your parents are of unsound mind. And it doesn't seem to be the case.



shaaarn said:


> 5. Is there anything else I should be aware of please?



Just remember...



shaaarn said:


> I recognise that it is their house and they are free to do whatever they want with it.


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## Brendan Burgess (2 Sep 2020)

shaaarn said:


> My parents want to take this offer from my sister despite it being below the market valuation.



I am not sure that it is below the market value. 

The house might be worth €300k with vacant possession.

But it's not worth anything like that when the sellers have a right to live in it for the next 20 or 30 years. 

I think your sister is very foolish to be doing this transaction.  

Brendan


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## odyssey06 (2 Sep 2020)

Are there fair deal implications if nursing home care is require e.g. most of the family home value will be protected under that scheme but the monies received for the property would not be.


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## shaaarn (2 Sep 2020)

Thanks Brendan for responding, all wise words.

Unfortunately I am keeping this to the facts rather than adding in the personal feelings.

Regarding "In cases like this, after the mother gets elderly and needs constant care, the daughter will tell the other siblings to do their duty and look after her or else they will shift her into a home. And of course, the daughter's partner or husband will probably want this done anyway."

My sister is currently single but this could change too of course. The deal "sold" to my parents is that she will commit to look after them.

The care home element has been mentioned because they are concerned that if they are admitted in the future they won't have funds in the bank to pay for this and by doing this deal they would.

A little off topic but what happens where people have a healthy bank balance but no property when it comes to care home fees compared to having minimal savings but property values?

Cheers
shaaarn


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## Protocol (2 Sep 2020)

shaaarn said:


> The care home element has been mentioned because they are concerned that if they are admitted in the future they won't have funds in the bank to pay for this and by doing this deal they would.
> 
> A little off topic but what happens where people have a healthy bank balance but no property when it comes to care home fees compared to having minimal savings but property values?



Do your parents understand how the FairDeal scheme works?


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## shaaarn (2 Sep 2020)

(Sorry odyssey06, our messages overlapped, great minds though)

Re:
But it's not worth anything like that when the sellers have a right to live in it for the next 20 or 30 years.

How could this be made legal?


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## Brendan Burgess (2 Sep 2020)

shaaarn said:


> How could this be made legal?



The solicitor advising your parents could draft a clause. 

But a 90 year old infirm person might have difficulty enforcing such a clause.

Brendan


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## shaaarn (2 Sep 2020)

Thanks Brendan.


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## Drakon (2 Sep 2020)

shaaarn said:


> 5. Is there anything else I should be aware of please?



Stamp duty on a €300k house is €3k.
Stamp duty on a €200k house is €2k.

If the house is being sold below market value as you indicate, Revenue (should they find out) may come looking for their missing grand, plus fees/penalties/charges. 



Brendan Burgess said:


> I think your sister is very foolish to be doing this transaction.



I agree. 
€100,000k for, say, 20 years carer work (assuming you’re parents live for a further ten years each).


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## shaaarn (2 Sep 2020)

Protocol said:


> Do your parents understand how the FairDeal scheme works?


 They don't appear to Im afraid Protocol but I have clued myself up on it now and it appears to be another reason as to why this is a bad idea.


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## _OkGo_ (2 Sep 2020)

shaaarn said:


> Unfortunately I am keeping this to the facts rather than adding in the personal feelings.



It really does not sound like you are doing this and you should follow your own statement and Brendan's advice to remember that they are free to do whatever they want with it.

You have estimated the house at 300k, a quick Daft search shows there are not many homes in Mayo in the 300k region so you are likely to be overestimating it. It is 25 years old and likely to be in need of repair and upgrade in the next 10 years too. 

The fair deal scheme is irrelevant to this situation. Yes it is a peculiarity that the property is protected after 3 years but cash is not. The only thing that is really impacted is your 'inheritance' as the cash pile whittles away. It sounds like your parents are happy to sacrifice this to get a daughter home and living with them. 

As for the caring part, it is also in your parents best interests to enter a care home if the medical need arises. Until then, the 'care' that your sister can offer is a clean home, groceries, shopping, cooked meals etc etc. It's madness to try to find a way to force her to continue caring for them beyond her ability to provide adequate care. 

Nobody has an entitlement to an inheritance and you would be wise to not push this any further with your parents. They could sell to a stranger and blow the lot on lotto tickets if they want, they earned it, not you. What this really reads like is 'I have put a value of 100k on the discount so I want my 25k inheritance now'...


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## Gordon Gekko (2 Sep 2020)

There’s an easier way to look at this.

Park the nursing home / carer point. That’s a separate issue.

What families tend to do in situations like this with a view to avoiding rancour is as follows:

- Get multiple valuations, perhaps three, and then take either the middle one or the average

- Work out the floor area of the house that the parents will occupy

- Find the discount multiple for a couple at the parents’ age

- Use those two numbers to work out the discount to be applied to the open market value without the restriction

- Then you have the market value

Who can moan about that?


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## MOB (3 Sep 2020)

Ignoring the care requirement: This is a bad deal for your sister.  If your parents need cash, it is a fantastic deal for them.  
Factoring in the care requirement:  this will be a bad deal for your parents AND your sister if your parents end up needing nursing home care/ Fair Deal.
Your parents may say that they want money for future care, but in reality they may just feel vulnerable and in need of a cash cushion, but are embarrassed to ask you or any of your siblings for help.   If that is the real issue, then tackle the real issue.  The desired outcome can be achieved in any number of better ways.   If in reality the money is not an issue for your parents, then  as far as your sister's finances go, if she sticks that €200k into any half reasonable investment, it will have doubled twice by the time your parents both shuffle off.  If your sister comes home to live with your parents, they can agree to  amend their wills to ensure that she can acquire the house on their death(whether by outright inheritance or on paying something to the other siblings).   She will be able to buy the house and have plenty left over.


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## Vanessa (3 Sep 2020)

I see a lot of problems coming down the line here.
 The sister is living abroad (for how long more we dont know).
She is getting a house at 2/3 rd value on some vague promise that she will come home to mind the parents someday.
Other siblings, who are resident here I presume,  are not getting a look in.
The parents will have 200,000 in the bank which will be gobbled up quickly if Fair Deal is required while the house is no longer theirs so cant be touched.
What happens if the parents pop their clogs? Is there a will in place? If not the sister is quids in again. If there is a will in place is there a recognition that thesister is 100,000 ahead of the others if indeed they are beneficiaries at all?
Just another case of bad estate planning that will cause dissension and arguments


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## Bronte (3 Sep 2020)

If I were the abroad sibling best bet would be to move in, no cash, look after parents and get parents to will entire house to her. Anyone willing to look after parents have to protect themselves from siblings who want an equal share without the 10 or 20 years of minding the parents. It only works out at about 10k a year for two decades. If the house is worth 200k.


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## Saavy99 (3 Sep 2020)

Bronte said:


> If I were the abroad sibling best bet would be to move in, no cash, look after parents and get parents to will entire house to her. Anyone willing to look after parents have to protect themselves from siblings who want an equal share without the 10 or 20 years of minding the parents. It only works out at about 10k a year for two decades. If the house is worth 200k.



Tend to agree with you, I have often heard of a daughter living at home and acting as carer to elderly parents for years then when they die, another sibling gets the lot, how awfully unfair.


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## NoRegretsCoyote (4 Sep 2020)

I'll focus on the practical side rather than family advice. A few things:

Your parents and sister will need separate legal representation for the transaction. The same solicitor cannot work for both parties. A solicitor might bring a perspective here to your parents that they won't get otherwise.
The Fair Deal scheme confiscates a huge amount of cash savings. If they need to go into a nursing home their wealth will be preserved better if it is in bricks and mortar, and not in a savings account.
I have read on other threads that lending to over-65s on the strength of the house has started again in the Irish market. This would allow your parents to release the equity with the balance (plus interest) redeemed on their death. They won't be able to release 2/3 of the equity and interest rates are high, but it would get them cash if they need it.
Your sister may struggle to get a mortgage anyway if she is looking for one. Banks are reluctant to deal with people who don't live in Ireland, even more so for parents with a life interest. No judge would ever throw them out if the mortgage isn't paid.
Value of €300k is unlikely unless it's a palace somewhere near Westport. A [broken link removed] 4-bed near Castlebar is being adverstised for only €275k.


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## Feemar5 (6 Sep 2020)

Your parents shouldn't worry about having no money for a nursing home - under Fair Deal they will be looked after and if they have a large amount of money  the Nursing home will have to be paid and if they have not Fair Deal will cover them. I think your sister is foolish but it also affects the rest of the siblings.    What happens if the deal goes through and your parents end up in a Nursing Home and they have to pay as they have a large amount of cash.    It won't last very long as the average cost of a nursing home in Mayo is €1390 according to the HSE.   Your sister will have the family home and the rest of you won't end up with anything.   If your parents wish to be fair to all they should divide the €200K between the rest of you.   On the other hand its their home and they should look after themselves first.  Maybe they feel that as your sister is unmarried she is best placed to take care of them.


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## Saavy99 (7 Sep 2020)

I sincerely hope going forward, the move towards communityity based care will be one the reality more than the norm.









						Nursing homes must be made a thing of the past
					

Older people have moral right to live in the community and be free of institutions




					www.google.com


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## Portia (23 Sep 2020)

Your parents and sister should all get independent professional legal advice before proceeding with this arrangement. Your sister may be getting a bad deal. So might your parents. Ultimately though it is your parents' decision - an adult has a right to make choices regarding their property, including unwise choices -  and you have no legal right to intervene.


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