Case study Temporary default in order to purchase another property

FioBi said:

If one of his parents were to be the owner of the new property then they could gift it to him at a date in the future when all is ok with principle residence and avoid CGT.

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But are they the owner, or are they holding it in trust for him... if they DO own it, then they bought it with money gifted to them by their son, and the amount would exceed the relevant threshold.

There would also be a gift every year from them to him to the tune of the Market rent foregone by them on the Laois property, which eats into the Class A threshold.

And also, a condition of the relief you are talking about (from the gift tax side) is that the recipient (the son in this case)mustn't own an interest in any other property at the time of gift. (haven't checked the CGT relief but there may be a similar clause)

Gift tax is the biggest joke i have ever heard in my life, you buy a present for an over 18 child he has to pay gift tax, the governement offers the banking system 65 Billion and rising but the banks are not liable for gift tax, come on.

I will take your advice for the sake of 100% legality, that's why the registered owner will be our family member who left the country never to return except for the odd holiday.

This family member does not pay taxes in Ireland anymore, he works abroad saved 40K and wants to purchase a holiday home for 40K, ok hit him with the property tax every year but that's it, he won't be liable for any more taxes.

My cousin owes this other cousin 40K from an old debt so he as to pay him back.

Family is always first, the bank comes second.

How much will the property tax be on on a country home worth 40K?

"What a tangled web we weave when first we practise to deceive."
I suppose the thinking is that if the system allows you to take advantage of it, you'r a fool if you don't.
Moral culpability for actions is no longer a concern. Hopefully this behaviour is not rampant, otherwise there is little hope for any recovery in the economy.

I don't suppose I care much if he is simply deferring his mortgage payments for a year in order to accumulate cash for the Laois purchase. No skin off my nose, or money from my pocket.

I do care though if he is planning to default/declare bankruptcy and move to the Laois property, which is what most people I imagine suspect is the plan.

As i said Sarah he will pay his way after the mortgage holiday, as long as the bank is willing to continue in waiting, so far they have been great, a few letters, the odd call that's all, im sure they prefer my cousin not to run away.

What bugs me is when an honest man tries to protect the taxpayer he is seen as a Fraudster, when someone runs away to the UK they are seen as not having caused the taxpayer any harm.
I think we all have what we deserve, having this sort of small mindset.

Protect the tax payer by not paying a bank the mortgage payments that he can pay while it is guaranteed by the government that funnels money into it.

You call this protecting that taxpayer, thats the kind of economics that got us where we are today

mark12 said:

Family is always first, the bank comes second.

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Which was first when he was looking to borrow the 300K?

Did he look to borrow it from his family? - No.

People were very willing to cosy up to banks when it suited them.

Protecting the future of his child is protecting the taxpayer, what if his son finds himself in the very likely position where he cannot find work in a few years time?

He won't have to go on the housing list, or receive rent allowance having this fully paid property will he?

My cousin is fully aware that he will probably still be in negative equity and paying for the current home when he is old and retired, so his son won't be able to rely on the family home.

Brendan the banks haven't done anything for mortgage holders except increase interest rates, my cousin is on a variable, the reason why they don't repossess the properties is simply because they can't sell and the bank's loss would be too big, they would have no mercy if they could.

How much will my cousin cost the taxpayer i ask you?

mark12 said:

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I am guessing your friend is thinking of defaulting on his 200,000 negative equity mortgage once he has enough saved for this house in Laois. He will probably go underground for a few years then reappear to inherit the house in Laois.

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That's the only way this makes sense.

Mark12 it's a very intereting idea, but too many things can go wrong.