# Should I buy?: opportunity to buy a house from an elderly family member.



## The Schill (30 May 2008)

*Age:
*25
*Spouse’s/Partner's age:*
n/a

*Annual gross income from employment or profession:*
*€49,500*


Net  monthly income:
€3,950
Monthly fixed outgoings: ie elec gas telephone sky insurance cc minimum payments etc
€0

*Type of employment:*
private sector

*Expenditure pattern:*
*Saver*

*Rough estimate of value of home*
n/a


*Other borrowings – car loans/personal loans etc*
nil

*Do you pay off your full credit card balance each month?*
Yes

*Savings and investments:*
Investment Fund - €18,000
Shares - €4,500 (company to be sold so this will be liquid soon)
Current Account - €6,000 (saved from Jan this year)
*Do you have a pension scheme?*
Yes - employer 7% / self 5%

*Do you own any investment or other property?*
No.

*Ages of children:*
None.

*Life insurance:*
No

*What specific question do you have or what issues are of concern to you?*
OK so I think I'm in decent financial shape and am looking to take the next step. I have the opportunity to buy a house from an elderly family member. The conservative value of it is €500,000 currently. In a great area with room to biuld on etc. It is certainly a place I can see myself for a long time. I am considering a mortgage of ca. €250,000 combined with €20,000 of my savings. 
Questions: should I consider a mortgage at my age? 
I haven't done the whole year off travelling thing. It is something I want to do soon, although will be broken up into 1 or 2 3 month periods off work. I may also have the chance to work abroad in the near future which I would like to accept, again not ideal with a mortgage.
I am thoroughly enjoying life at the moment, I can go out when I want (which isn't too often), I make the most of my free time with my friends and am also taking further study to improve myself.

Would someone approve me for a mortgage of €250,000 over say 30 years? If not what can I realistically expect? Does it qualify for a LTV mortgage?

As the family member is elderly, I would like to do this ASAP as who knows what is around the corner and if the worst did happen, some of the reamining family members may (or *would*, in fact) not be positive about this move. 

Also, if anyone has any additional investment advice for me. I will be cashing out the €18,000 to reinvest, my thoughts are leaning towards more shares, but I need to know I can leave this money for the medium term before taking action, ie not spending it towards home!


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## so-crates (30 May 2008)

*Re: Should I buy?*

Okay, am I understanding you here? 
House value: 500k
Proposed mortgage: 250k
Deposit: 20k

Just to confirm is the other 230k being gifted to you? Have you considered the potential tax implications of such a gift?


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## Guest116 (30 May 2008)

*Re: Should I buy?*



The Schill said:


> *Annual gross income from employment or profession:*
> *€49,500*
> 
> Net monthly income:
> €3,950


 
Is that right, 49.5k should be about 3k net a month? Its a gross of 4125 per month so is there a typo there in one of your numbers?


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## The Schill (2 Jun 2008)

*Re: Should I buy?*

Apologies, the monthly net is €2,950, not €3,950 as stated.

The other €230,000 will be "discounted" as I'm purchasing from a family member. What tax implications are involved in this?


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## rev87 (2 Jun 2008)

*Re: Should I buy?*



The Schill said:


> Apologies, the monthly net is €2,950, not €3,950 as stated.
> 
> The other €230,000 will be "discounted" as I'm purchasing from a family member. What tax implications are involved in this?


 
The €230,000 is a "gift" to you in revenues eyes. [broken link removed]

As far as i understand it, you are allowed a tax free threshold depending on relationship to your family member, you deduct the threshold from the €230,000 and tax is payable at 20% on the remainder!


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## The Schill (3 Jun 2008)

As I have been living with the family member for a no. of years and assisting him with household duties etc, I believe that I can be exempt from this tax totally.

I have a couple of meetings lined up with banks this week, I should qualify for the 50% LTV NIB mortgage. Do people think this is the best value option for me at the moment?


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## Bronte (3 Jun 2008)

I hope the elderly family member is getting independant legal advice particularly if they are signing away their only asset, their home.


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## The Schill (3 Jun 2008)

It has been agreed by both the member in question (who is of sound mind) and the majority of the family.


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## cancan (3 Jun 2008)

You want to go travelling and 





> As the family member is elderly, I would like to do this ASAP as who knows what is around the corner and if the worst did happen, some of the reamining family members may (or *would*, in fact) not be positive about this move.


 
Do you really want to do this - doesn't exactly sound 100% above board really, and could lead to problems down the line.....

You'll come out of it bad, not matter what your motives are.


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## Gus2008 (3 Jun 2008)

If you're questioning on a purely financial basis, then yes you should buy. It is a good opportunity to acquire a property at substantially less than OMV, and therefore makes sense. 

As some other responders have noted, the purchase raises ethical/ moral questions, but that is between you and your conscience and none of us are in a position to advise!


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## so-crates (3 Jun 2008)

The Schill said:


> I haven't done the whole year off travelling thing. It is something I want to do soon, although will be broken up into 1 or 2 3 month periods off work. I may also have the chance to work abroad in the near future which I would like to accept, again not ideal with a mortgage.
> I am thoroughly enjoying life at the moment, I can go out when I want (which isn't too often), I make the most of my free time with my friends and am also taking further study to improve myself.
> 
> As the family member is elderly, I would like to do this ASAP as who knows what is around the corner and if the worst did happen,...





The Schill said:


> some of the reamining family members may (or *would*, in fact) not be positive about this move.





The Schill said:


> As I have been living with the family member for a no. of years and assisting him with household duties etc, I believe that I can be exempt from this tax totally.





The Schill said:


> It has been agreed by both the member in question (who is of sound mind) and the majority of the family.


 
Right, first off, I am not accusing you of any underhand or shady dealings, or in anyway impugning your character, but, as you can lightly consider long-term travel and working abroad, your elderly relative does appear to your eyes to be capable of independent living so it sounds as if it has been an arrangement of convenience for you both rather than of necessity for your relative. Not sure whether that in anyway influences the tax perspective but I would definitely want to consult a solicitor on this before proceeding.
Also agreement from the family could be construed as pressure from the family on a vulnerable elderly relative who is in a partially dependent position and feels obliged to help a young, caring relative onto the property ladder. Irrespective of whether you have the blessing of every member of the family, or whether other family members are put out that they aren't getting a share of the inheritance, or that they are against such a massive gift to one single person at the expense of all others your elderly relative MUST take *INDEPENDENT* and *QUALIFIED LEGAL* advice on what is a very big move on their part for their own self and safety. Family concordance is no substitute. They have to consider potentially future care, rights of residence, loss of property, taxation, etc. It isn't a simple majority rules, *it is their property not the family's*. It is their right to dispose of it in whatever manner they choose without reference to any siblings, children, nephews or nieces but they should be allowed to do so in a free and fair manner without feeling undue pressure from well-meaning relatives. 



The Schill said:


> I have a couple of meetings lined up with banks this week, I should qualify for the 50% LTV NIB mortgage. Do people think this is the best value option for me at the moment?


Basic consideration is, what is the best value. The LTV NIB mortgage certainly looks attractive.


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## clownie (4 Jun 2008)

Hi

If the elderly relative needs renovations to the house eg stairlift, disabled bathroom or bedroom downstairs then the grant is means tested based on the owner of the house. In our case my mil lives in 'her' house but my dh name is on the deeds. We don't live with her but because of the means test she will not get any grant towards adjustments to her house. I would never advise an elderly relative to sign over their house. It would be a mad thing for them to do!


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## The Schill (6 Jun 2008)

Thanks eveybody for the advice. It's certainly given me plenty of food for thought.

Clownie: there has been some work done in the house by this method and a few small projects left to complete, I understand where you're coming from


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