buying small house for mother to live in

paddytheape

Registered User
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Hi all,
My mam wants and needs to downsize but we would like to hold onto family house if possible. I propose to take a mortgage to purchase the house and give my mam a lifelong tenancy with token minimum rent. She would cover her own day to day costs, plus bills. This would effectively be my summer house, ( I have my own PPR in Dublin, my mam lives in rural town) but my mother living here, another sibling would remain in family home (they have been living there with my mam these past 5 years) until we decide what to do with it. What are the tax implications to both my mother and me?. I've researched and googled this to death and am still no wiser.
 
In theory your mother would be getting a gift from you to the market value of the rent. But I doubt anyone in Revenue would even want you to declare something like that. It would probably be well covered by the CAT exemption of €3,000 a year and the lifetime threshold of child to mother of €32,500.

If you do charge her rent, you would have to declare it for income tax purposes. But I don't see the point in charging rent. You would have to register it as a tenancy and you don't want the bureaucracy of that.

I suppose you could charge rent up to the level of interest you pay so that there would be no tax liability.

As it's not your PPR , any increase in value on sale would be subject to CGT.

As it's your second home, in the future there might be some form of additional taxation introduced.

Brendan
 
Thank you Brendan, that's what i thought, nice to see it in writing. I won'b be charging her rent. If my mam sell's her house down the line and wants to buy mine/hers, we can do this through a solicitor (do we require seperate solicitors or would the family solicitor suffice?) and the only cost to her would be stamp duty? And the cost to me will probably be a small CGT bill too but i could cope with this.
 
I have a client who has done something similar. It was done when he was single and had surplus cash. Now 18 years later he is married, has children and is paying a mortgage on his mother's house and his own house. It has caused a bit of friction between the client and his spouse to say the least. People also live a long time now (thankfully) so you might not be seeing your money back for a long time. Your partner would want to be really into it. If you are single then be prepared to explain this if you enter into a meaningful relationship as it may cause problems if money is ever tight. Also the arrangement with your sibling living it sounds fine for the moment but how about when your mother dies and you want the house - will everything be rosy then.

Just passing on my experience of hearing the issues over the last number of years and other things that may be relevant.
 
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