mortgage on a property you will eventually own

[wheels]

A friend of mine is moving into a property owned by her parents to live in in order to avoid gift tax. She wants to totally gut it and renovate it but as it won't be in her name for another three years how would she go about this? It will cost her approx 70,000euro. Is it possible to get a mortgage for this or would she have to simply get a loan? Are loans given out for that much? We're at a loss here.

 

[ClubMan]

A friend of mine is moving into a property owned by her parents to live in in order to avoid gift tax.

Presumably this is all legit?

It will cost her approx 70,000euro. Is it possible to get a mortgage for this or would she have to simply get a loan? Are loans given out for that much? We're at a loss here.

You cannot get a mortgage (secured loan) against an asset that you don't own. An unsecured loan for €70K would probably be hard to come by and expensive if you could get one.

 

[PM1234]

Is there a current mortgage on the property?

Depending on her parents age and if they are still working and qualify for a mortgage, it might be possible that a lender would agree to allow her on a mortgage as a joint borrower with her parents while title remains in the parents names.

 

[Vanilla]

Does she have to do this to avoid CAT? What is the value of the house now without renovations, and has she had any prior gifts?

 

[Northie]

Have managed to do this about 4 years ago. Similar situation in that parent owned the house wanted to give it to me and hubbie but was facing a large CGT bill. Bank agreed to a mortgage in 3 names even though our names weren't on the deeds. Parent wasn't covered by life assurance so basically if they died we would still be liable for the mortgage. Only our salaries were taken into account for it.

Needless to say solicitor wasn't happy as she was right in advising myself and hubbie that should parent decide to will the house to someone else we
would end up paying a mortage on something we had no chance of owning.

We were happy enough with our situation to risk this, and when parent died about 2 years later the house "thankfully" was left to us.

Had long discussions with Revenue as it was a relatively unique situation in that parent inherited the house 30 odd years ago and was facing a substantial CGT bill in order to gift it to me. It was more this tax rather then CAT that was causing our problems.

Definitely worth talking to your solicitor, bank and revenue about it. BUt you would want to be on very good terms with your parents!