Getting a mortgage on parents house

A

Amanda

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My husband and I are thinking about getting a mortgage on my parents house to release some equity for them. We are not sure about how to avoid paying stamp duty (not sure of the rates as we live in UK). Can my mother change the name on the deeds first and then we get the mortgage or do we effectively buy the house from her for the mortgage amount ??
 
Amanda said:
My husband and I are thinking about getting a mortgage on my parents house to release some equity for them. We are not sure about how to avoid paying stamp duty (not sure of the rates as we live in UK). Can my mother change the name on the deeds first and then we get the mortgage or do we effectively buy the house from her for the mortgage amount ??
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is the house in ireland or the UK ?

will this house be your PPR ?
 
The house is in Ireland, we will be moving over from the UK so it will be our PPR
 
Need to give us some details as we would be answering in the dark:

- whats value of house;
- will the folks be living in it as well?
- are you the only child or are there others?
- What is the intention of your parents?
- Do they need the cash?
 
- whats value of house; 800,000
- will the folks be living in it as well? No
- are you the only child or are there others? Only child
- What is the intention of your parents? Not sure what you mean ??
- Do they need the cash? Yes


I will be getting a mortgage for 200,000
 
Where are your parents going to live? Are you buying the house from them at full value ie. 800,000 or less?
 
We are looking to get a mortgage of €200,000 to release money for my parents (they are unable to get a mortgage themselves) for the time being they will stay in the property but will sign the house over to us (they have fully agreed to this and it doesn't worry them at all as I'm hardly going to sell the house from under then !!) The house is worth approx 800,000.
 
First off, your parents will need independent legal advice for what on the face of it seems an improvident transaction for them.

Secondly in relation to the tax aspects, you are effectively getting a gift of €600,000 from your parents. There are two charges to tax here ( no CGT as it appears to be your parents PPR)- stamp duty and Gift tax ( or CAT). In relation to stamp duty, if you have owned a property before the rate will be 3.75% on €800,000 and if not, the rate will be 3% on €800,000- that is if it goes into your sole name- if it goes into the joint names of yourself and your husband you can double the rates above.
In relation to CAT- if the property were to go into your sole name, the CAT would be roughly €600,000 less €466,725 at 20% ( but you are entitled to take into account the legal costs, stamp duty, SGE etc). If it goes into the joint names of yourself and your husband the bill will be €300,000 less €23,336 at 20% roughly.

If you had been living in the house for a number of years, there would be a potential exemption from CAT. If your parents reserve a right of residence, there would be a further deduction from CAt, but it is unlikely any bank would approve a mortgage on that basis.
 
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