# House swap.. is it an option?



## doubledeb (6 Sep 2012)

Just wondering if there are any companies set up in this country (or any country for that matter) that facilitate house swaps.

For instance:- If John and Mary have a house in the countryside worth 250k, neg eq of 50k.  James and Marie have a house in the city worth 250k, neg eq of 50k.

I understand the size and quality of the house and the area would come into it too.

They both want to move home, but are tied because of the neg eq.  I wonder if this is a viable option for them both.
What are the legalities etc

Its just something that popped into my head and could be an option for many who want to downsize or upsize for that matter but are tied by neg eq etc.

It could very well be a rediculous suggestion, but maybe one looking into?


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## Brendan Burgess (6 Sep 2012)

You can't swap ownership of your house like this.

You could of course rent your house to the othere party free of charge and vice versa. 

An interesting idea for a website.


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## doubledeb (6 Sep 2012)

I was thinking the same thing Brendan, but wondered if there already was a company trading that provided this service.

I was wondering what the legal implications would be though.

So each person would keep paying their own mortgage once it was the same cost i suppose and both parties get to live where they want to live.

I am in a position like this so would love to know if anyone else thinks its a good idea.


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## mark12 (6 Sep 2012)

That is a great idea but, simply because it is a great idea, it won't go ahead. 

The Banks wont allow anything unless under pressure from the Government, the Government wont do anything unless under pressure from the Troika, so you should really send this to Christine Lagarde from the IMF or Mario Draghi from the ECB, they are our real leaders.

The problem is of course the government would take the opportunity to stop your Mortgage interest relief payments to both parties as none of you would be owner occupiers anymore. You would both lose the protection under MARP also, should any of you fall into arrears at any stage.


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## Brendan Burgess (6 Sep 2012)

The legal implications are the same as renting your house to anyone else. 

If you could find someone to swap rentals with, you wouldn't charge rent and you wouldn't be taxed.

You would lose mortgage interest relief while it was not your principal residence.

It would continue to be protected by the Mortgage Arrears Code as you have no other property. 

You could make a pre-budget submission on the tax issues.


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## doubledeb (7 Sep 2012)

Brendan Burgess said:


> You could make a pre-budget submission on the tax issues.


 
I wouldn't even know where to start Brendan!
Hopefully it may be an option in the near future..


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## Brendan Burgess (7 Sep 2012)

Just write to the Minister for Finance and copy it to your local TDs. 

The general idea should be that people who can't sell their family home and rent it out while renting another home should not be put at a tax disadvantage. Maybe start a separate thread on this topic here and distill the ideas in the thread into a letter to the Minister. 

Brendan


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## elcato (7 Sep 2012)

This is a spin on what I suggested here. Needless to say nothing became of it despite local TD bringing it up in Parliamentary Questions it was nicely swept under the carpet.


*Wednesday, 25th May 2011 - Minister Michael Noonan*
 To ask the Minister for Finance if he has considered the following  proposal (details supplied) to assist those in negative equity..
 (The following could apply for anyone who bought from 2004 onwards,  has moved out of their PPR and who have no other property. Any rent  received would be tax free. A clause could be introduced stating that  monthly rent could not exceed the monthly repayments on their  mortgage. To police the matter, a statement could be sent in by  individuals with their Form 12 to the Revenue Commissioners. This matter  has arisen as many incorrectly feel that as long as rent does not  exceed monthly repayments they are not eligible for income tax. Given  that the last Government reduced the interest allowance for tax  exemption from 100% to 75%, this break would benefit people at  the bottom of the ladder greatly.)*Reply*
 In the Programme for Government we committed to helping homeowners in  distress to weather the recession and outlined a number of proposals  aimed at protecting homeowners and their families. These proposals and  the Deputy’s submission will be examined in tandem with the normal  process of reviewing and considering taxation measures and reliefs in  the context of ongoing budgetary and economic policy.​


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## doubledeb (7 Sep 2012)

Thanks for that elcato, I should have searched the forum before I posted.

I wouldn't want it to turn into a landlord situation or a profitable setup persay, move of a 'help each other out' situation.

The mortgage payments would have to be in or around the same amount for both homes. I don't think that anyone should gain financially from the swap. Its about paying the same in rented accom as you would in your own home but basically live where you want to live instead of where you have to live. As long as there is neg eq and neither party can sell.

Of course if there was a shortfall on either side or a gain, then anything over should be counted as income and taxed appropriately.

You would still own your home and the other family would still own theirs. But, due to work/growing family reasons everyone would be where they want to be.

Maybe the govt should facilitate it, allowing MIR to continue. Although when I think of it, if they have nothing to gain from it, why would they

Just to be clear.  I don't think landlords should have the option to do this, it should only be allowed if its your only home and PPR.


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## elcato (7 Sep 2012)

I think you read the first post and saw the word landlord and therefor inadvertently added the word evil. Once someone lets another stay in their home they are landlords. Don't let the terminology confuse the issue. The bottom line of the original post I sent was for someone who wanted to move to get employment but could not sell their home should be allow do so without penalty. If someone swops a house with someone else both are landlords to each other.


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## SarahMc (7 Sep 2012)

I think its a great idea, im not sure it needs legislative or policy change, just someone of an entreupeunerial mindset to set up a website.


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## mandelbrot (7 Sep 2012)

Brendan Burgess said:


> If you could find someone to swap rentals with, you wouldn't charge rent and you wouldn't be taxed.


 
I'm not so sure that it could be viewed that simply.

If there's no consideration or not consideration in full, then there's a Gift Tax implication (see S.40 CATCA - http://www.revenue.ie/en/tax/cat/guide/free-property-loans.html)

If there is consideration then the above doesn't apply and arguably it's income and liable to Income Tax, presumably under Case V...

I'm not saying it's not feasible, just that it would definitely require a policy decision to be made, and possibly a Revenue concession or two, to avoid acrimony.


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## doubledeb (7 Sep 2012)

If there was legislation that would allow you to offset the rent you are paying against the rent you are receiving, I fully agree that any difference could then be taxed.  Whether it is seen as CGT or income would be up to the govt.

I'm not looking at this as a way of making money or paying less in income tax.  However, it may give those that really want to move and can't, another option for their growing family.

For instance, if my mortgage is €900.  I rent the house where I want to live for €900.  I loose nothing nor do I gain anything.  The family who are renting my PPR for €900 are in exactly the same position.  The govt would loose nothing.

If it only applied to PPR's then I doubt anyone could/would possibly use it as a tax avoidance scheme.  Why would they if there was nothing to gain?


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## doubledeb (7 Sep 2012)

I'm not sure what way landlords pay income tax, but if you are returning your income tax return at the end of the year, surely the mortgage on any home you are renting out is classed as an expense?

Please correct me if I am wrong... knowing me I probably am. Again, I have no experience in this area at all.

Another angle to look at it is, if you are still paying your own mortgage and the other family are still paying theirs, you wouldn't officially be in reciept of any income. You would just not be living in your own house. Or, you could be renting out your house for nothing, because you would still be paying the mortgage on your own home. And vice versa. Would that take away any income tax problems? You may loose your MIR and your insurance would change but you wouldn't actually be receiving any income for your property.

*If there's no consideration or not consideration in full, then there's a Gift Tax implication (see S.40 CATCA - **http://www.revenue.ie/en/tax/cat/gui...rty-loans.html**)
*
This is the kind of legislation that could be changed or adjusted to facilitate a house swap in certain circumstances.


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