Inheriting a property I'm renting

[Floride22]

I'm wondering if anyone might have been in a similar position before, or knows if I should speak to a solicitor or tax advisor or both?

I am currently renting my parents previous home from them at market value, as they have a massive mortgage from issues during the crash. I am paying a very large portion of my monthly income in rent, which makes it difficult to save. I could move elsewhere for a bit less but my parents have had bad luck with tenants in the past and they are old now and I want to help them have a more comfortable life.

However, I can not afford to pay this rent and save to buy my own home. I will eventually inherit this house but I will be subject to inheritance tax. I worry because in the end all of the money i will have paid in rent and inheritance tax will be more than the cost of buying my own home.

What I am wondering is will the rent I have paid be deducted from my inheritance tax liability, and do I need to draw up a contract with my parents and a solicitor for this to work? Revenue is very vague. At least if this is the case I know I am reducing my future tax liability each month, I am just concerned I am making a bad financial decision.

Any advice would be massively appreciated!

 

[RedOnion]

Is your patents mortgage on the property you're renting, or a different one?
Are you an only child?

There are better ways to structure the overall arrangement.

 

[_OkGo_]

I will eventually inherit this house but I will be subject to inheritance tax.

as they have a massive mortgage from issues during the crash

Are you sure about this? Your parents may not have a sufficient (or even any) mortgage protection policy to cover the outstanding debt if they were to die. If this is the case then it is not theirs to give to you.

Do you have siblings? That will further complicate inheritance and what you think you might get. There is also the potential for nursing home care to wipe out a big chunk of their wealth before you get what's left

You probably do need to speak with a professional at some point but your first step is to sit with your parents and understand what their financial situation actually is. It may not make sense for you to be renting this property at all for your own financial wellbeing.

 

[Brendan Burgess]

I am currently renting my parents previous home from them at market value,

If you are paying them market rent, then I don't see how you are doing them a favour as you seem to imply.

I could move elsewhere for a bit less

So you are not paying too much. If the house is too big, can you get someone in to share the rent with you?

I will be subject to inheritance tax.

You should give the figures.
1) How much rent are you paying?
2) What is the value of the house?
3) Will you be inheriting other assets?

I presume that your parents have a big mortgage on the house and that the interest they are paying is higher than rent you are paying?

If they have no mortgage, it makes no sense for you to be paying rent which is taxable in their hands but for which you get €1,000 tax credit.

Brendan