Buying parents home

Hi, long time lurker, first time poster.

Fiancé and myself have recently moved back in to my family home to be closer to my mother after my father passed away. My mother is keen to sell the house to us for less than market value but continue to live with us afterwards. The idea being that she uses money from the sale to extend the current house so there’s more room for us to live. Benefit for her is that we stay close by and benefit for us is the property obviously. I’m an only child so no one else to inherit house. There’s about a 20k mortgage left on the house also. Market value of property is roughly 350k

I suppose my question is, is this possible? I know there’s certain inheritance/gift tax implications but would a mortgage lender even go for something like this? Is it legal?

I knowone of the first things people will say is daughter in law living with mother in law won’t end well but we’ve done it for long enough now at this stage I don’t think it would be an issue.

it would give my mother some comfort as she gets in life but also allow us to purchase a property.

appreciate any thoughts people may have.

MM

Does your mother have many more assets? Just in the context of where you might end up vis a vis the Group A threshold (€335k).

Banks are happy to facilitate such arrangements subject to normal lending criteria.

e.g. you buy the property for €350k and the 20% you need to put down is actually a gift from your mother so your mortgage is €280k.

It can become more complex because the situation you describe is where your mother would be selling the property to you subject to a right of residence for her. In such circumstances, the market value of the property is not €350k. But that’s enough to blow the mind of a retail bank and, with respect, the transaction is not at a level that would interest the private banks.

The best approach depends on your family’s overall financial circumstances, especially your mother’s.

1) It is perfectly legal

2) If your fiancé and yourself buy a €350k house for, say, €290k.
You will both be regarded as getting a gift fo €30k each.
As this is well below the threshold for you, there are not CAT (inheritance tax) consequences for you other than it uses up part of your €335k threshold.

Your fiancé would have a €16,250 threshold, so would pay CAT at 33% on the €14k difference. (Or it might be €11k after a €3k exemption)

3) She could sell the house to you and there would be no CAT payable. Then when you get married you can pass half of it to your wife with no CAT liability.

4) Not sure what happens if you get married first and then she gifts the house to you.

Just to be clear, I don't think that this is a good idea at all.

1. Although you both get on well with your mother, people change, and there might well be problems.
2. What happens if you want to trade up or move because of your job?
3. What happens if your mother needs to go into a nursing home?

By all means move into your mother's home and mind her. But you should both retain the flexibility to end this.

You do not need to own a home, if you are going to inherit your mother's home anyway.

Brendan

Do you have kids? If not, do you plan to have any? If so, do you intend to have more?

My definition of what is 'comfortable' has changed a lot as we've had kids, and they've got bigger.

What works now might not be robust to changes in circumstances.

Once you buy your mother out, extend, and give her a right of residence it becomes very difficult to adjust.

Have you discussed your mother's will with her? As an only child are you presuming that the entirety of her estate will transfer to you?
Does it therefore make sense to "sell" the house to you?
Without being morbid if she is likely to pass within the next few years it would seem to me to make more sense to wait.
Also you make no mention of what your income is and whether or not you can afford a mortgage and for how much.

If you mother was to use the proceeds of the sale to extend a house that you and your partner own, would this not be deemed to be a taxable gift ? This may raise CAT issues for your partner if the house is in both names prior to renovations.

Would the dwelling house relief be applicable in this scenario. I am not quite sure if it extends to living with a dependent parent

There's family financial dynamics in play here,think it's an equity release using a sale within the family sort of thing, both sides happy and all that.
The banks will only be worried about loan to value on the house, and whether you can afford the mortgage repayments.
Any future plans you and your parent have could, perhaps, be left to the future.
Revenue will need to know everything so you ,and your parent, should speak with tax advisers
Best to get all the tax implications and the costs clear from the start.