Buying parents house at below market value

H

HBarca

Registered User
Messages
6
Hi,
Just wondering what are the tax implications for my father selling me the family home at substantially below market value. It's my parents primary residence and they've lived there their whole lives. I'm living at home currently just saving some money due to the overheated property market in Dublin.

The house is probably worth around 450k but as a single man on my salary I'd imagine if get a mortgage around 180-190k so you'd be looking at a "gift" of around 270k ish. I've no intention of doing this as I want to get my own place to live but I imagine there a tax implications associated with this anyway? Although I'm aware there's a allowance for "gifting" of around 335?

Thanks in advance.
 
Can the difference be agreed as a loan? Offspring can repay parent €x amount per year?
 
Why do you want to go down that road? Was it your father’s suggestion? Are your parents elderly.
Will you inherit the home outright.
Do they want to downsize?
So many questions, to get the right answer/direction that would suit you all.
 
What's the benefit to you of buying the house now? Is it to give a cash injection to your parents? From your OP it seems you want to get your own place so I fail to see what benefit it is to you.
 
dereko1969 said:
What's the benefit to you of buying the house now? Is it to give a cash injection to your parents? From your OP it seems you want to get your own place so I fail to see what benefit it is to you.
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Yeah I do, parents are 75, I've been living away for years and only back to help out temporarily, was living in cork.
My father also has seniors money loan on the house to the tune of 60k so it's a less than attractive proposition but I was just wondering what the tax implications would be of buying something at so substantially less than market value. The house also needs a fair amount of renovation work. He wants it for a cash injection basically as he made bad investments with buy to let, which are now gone.
My suggestion was selling and downsizing and using the profit as a pension since he has no other money.
 
HBarca said:
My father also has seniors money loan on the house to the tune of 60k so it's a less than attractive proposition.....
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Does your dad know that whatever amount is owed must be repaid if the house is sold ?

Is €60K the amount your dad borrowed or the amount he currently owes ? The two amounts can be very different, €60K borrowed 10 years ago, would probably be well over €100K owed today.

HBarca said:
My suggestion was selling and downsizing and using the profit as a pension since he has no other money
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Is selling and downsizing still an option bearing the above in mind ?
 
Afaik 60k is what's owed, I'm aware they charge compound interest, we were against him taking out the loan but let's just say he's not good at taking advice.

The 60k would have to be be cleared so I think it's still an option albeit less than ideal. Better than me buying for 200K+ below market value anyway.
 
The Seniors money loan I assume is secured on the house so you're starting point would be to get that confirmed and also to understand the implications of the house being sold to you and how much needs to be repaid. I assume the loan would have to be repaid from the proceeds but that may not give your parents enough to downsize. That should be your starting point to get confirmation of all that.

Secondly, if you still believe this is viable for your parents, then get the house properly valued so you understand the potential amount of any gift. You should also be confirming how much you can borrow from a bank and if they are comfortable lending for something like this where the LTV is going to be quite low but the circumstances a bit unusual. A good broker may be able to advise

Given the age of your parents (and sorry to be morbid) but you could also do worse then speaking to someone in the Citizens Advice Bureau as to the impact the sale and gift would have on any Fair Deal application or any other means tested support your parents may require in the future.
 
You should look into the stamp duty aspect as well. The stamp duty will be assessed on the Market Value of the property, not on the actual undervalue sale price.
 
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