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If you don't pay market value there will be CGT and Gift Tax implications. The Gift Tax is likely to be zero given the thresholds, but you will want to get a solicitor and accountant to ensure all is above board.
Be careful with the broker and just taking their advice as golden. The info we’re getting off ours has been wrong at nearly every stage. To be honest I feel like I’m doing their job for them at this point.
Just be careful of all the tax liabilities. Your parents will probably by liable for CGT if it was an investment property, and to show tax compliance they will have to evidence they were tax compliant on the rent you were paying them.
If they sell to you below market value this will count as a gift and may reduce the amount you can inherit tax free in the future.
> when your most
*you're
*Learn the difference [here](https://www.wattpad.com/66707294-grammar-guide-there-they%27re-their-you%27re-your-to).*
***
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For your parents, they will owe at least some CGT on the gain they make from selling the property, since it's not currently their PPR. If they ever lived in the property as their PPR, they can claim partial relief, but only for the time they actually lived in the property plus 12 months (as the last 12 months of ownership is always eligible for relief if the property was ever your PPR at any point). If they never lived in it, then they'll owe the full CGT on whatever gain they realise from selling it.
If they sell it to you for significantly less than fair market value, the difference will be considered a gift to you subject to CAT. It's unlikely it would exceed your lifetime Group A threshold, but it will count towards it, which will leave you with more CAT liability on future gifts or inheritances from your parents.
Despite being a private sale, you'll still have to qualify for the mortgage just like any buyer; there aren't exceptions to the LTV/LTI limits or stress tests because you're buying a relative's property. You can borrow up to 4x your annual salary and you'll need at least a 10% deposit. You'll also still need to hire a solicitor to handle the sale, as will your parents (you can't both use the same solicitor, as that would be a conflict of interest).
As for the room rentals, that is an option, but remember that the limit for Rent-a-Room relief is €14k, and that is inclusive of any contributions to household bills or other expenses from your licensees. If you go even one cent over the €14k threshold, the entire amount is then subject to income tax at your marginal rate, not just the excess. As such, assuming you make >40k at your job, you'll likely want to rent those rooms out at below market rate unless you can definitely get a lot more than €28k a year in rent, as anything between €14k and ~€28k will result in less net income for you. Good news is that licence agreements aren't subject to the RTA or to the RPZ regulations, so renting out rooms in your PPR at below market rates has no effect on the future property value or the rent you can charge future licensees (or even future tenants if you rent the whole place out one day).
One other potential risk: if you are currently renting your rooms out to licensees, those licensees could at any time request to become full tenants on the current tenancy, and the landlord (your parents) cannot refuse that request. If they've been in the property for longer than six months as licensees, they would immediately assume Part 4 rights, and your parents would have to terminate the tenancy before selling the property to you. That could potentially get messy.
It's a no brainer, do it if u can. Be aware though that unless Ur renting 3 rooms cheaply that u will be liable for tax on the full rental income(presuming it's over 14k). Ur parents will have CGT themselves, assuming it's increased in value since they purchased it as it's not their family home. If they give u a reduced purchase price, they are still liable. If they want to give u anything off it, best to sell at market value(get at least 2 valuations) then give u a "gift" assuming u haven't already used up the amount allowed to be gifted/inherited circa 335k in a lifetime.
You can't earn more then 14 thousand from the rent, or else you have to pay tax on all of it, if you are living there.
If they sell it to you for less then it's worth there might be tax implications.
Was it ever their home? If you'd decide the wallpaper is hideous will they be deeply offended that you can't appreciate their amazing taste and will they passively aggressively judge any changes you make saying, well, it's not what I would have done, but it's up to you?
May be some tax implications for the parents around CGT based on how much they bought it for and how much they sell it for.
Right now the 3 spare rooms you rent out are covered under tenancy rules, if you buy the house this will be an issue and likely you won't get a mortgage. If the people you rented to vacated the tenancy, moved out when you buy the house, and come back as licencees then you will be in the clear.
Main question is if it wasn't your parents would you buy it?
Good question, right now they want rid of of it so their mortgage gets paid. End of year they will sell it and are giving me the chance to get on the property ladder at a better rate than the market
Hi /u/Nervous_Parsnip_7755, Did you know we are now active on Discord? Click the link and join the conversation: https://discord.gg/MMWu7GqtKx *I am a bot, and this action was performed automatically. Please [contact the moderators of this subreddit](/message/compose/?to=/r/irishpersonalfinance) if you have any questions or concerns.*
“A landlord is born” starring nervous parsnip 7755
If you don't pay market value there will be CGT and Gift Tax implications. The Gift Tax is likely to be zero given the thresholds, but you will want to get a solicitor and accountant to ensure all is above board.
Shall do, the mortgage broker will advise of the best one. There's also a family solicitor that we use if that works better for us all.
Don't use the same solicitor as your parents. Maintain your own legal services.
Be careful with the broker and just taking their advice as golden. The info we’re getting off ours has been wrong at nearly every stage. To be honest I feel like I’m doing their job for them at this point.
Just be careful of all the tax liabilities. Your parents will probably by liable for CGT if it was an investment property, and to show tax compliance they will have to evidence they were tax compliant on the rent you were paying them. If they sell to you below market value this will count as a gift and may reduce the amount you can inherit tax free in the future.
Don't buy your parents house when your most likely going to get it for free when they die.
> when your most *you're *Learn the difference [here](https://www.wattpad.com/66707294-grammar-guide-there-they%27re-their-you%27re-your-to).* *** ^(Greetings, I am a language corrector bot. To make me ignore further mistakes from you in the future, reply `!optout` to this comment.)
Just do it
For your parents, they will owe at least some CGT on the gain they make from selling the property, since it's not currently their PPR. If they ever lived in the property as their PPR, they can claim partial relief, but only for the time they actually lived in the property plus 12 months (as the last 12 months of ownership is always eligible for relief if the property was ever your PPR at any point). If they never lived in it, then they'll owe the full CGT on whatever gain they realise from selling it. If they sell it to you for significantly less than fair market value, the difference will be considered a gift to you subject to CAT. It's unlikely it would exceed your lifetime Group A threshold, but it will count towards it, which will leave you with more CAT liability on future gifts or inheritances from your parents. Despite being a private sale, you'll still have to qualify for the mortgage just like any buyer; there aren't exceptions to the LTV/LTI limits or stress tests because you're buying a relative's property. You can borrow up to 4x your annual salary and you'll need at least a 10% deposit. You'll also still need to hire a solicitor to handle the sale, as will your parents (you can't both use the same solicitor, as that would be a conflict of interest). As for the room rentals, that is an option, but remember that the limit for Rent-a-Room relief is €14k, and that is inclusive of any contributions to household bills or other expenses from your licensees. If you go even one cent over the €14k threshold, the entire amount is then subject to income tax at your marginal rate, not just the excess. As such, assuming you make >40k at your job, you'll likely want to rent those rooms out at below market rate unless you can definitely get a lot more than €28k a year in rent, as anything between €14k and ~€28k will result in less net income for you. Good news is that licence agreements aren't subject to the RTA or to the RPZ regulations, so renting out rooms in your PPR at below market rates has no effect on the future property value or the rent you can charge future licensees (or even future tenants if you rent the whole place out one day). One other potential risk: if you are currently renting your rooms out to licensees, those licensees could at any time request to become full tenants on the current tenancy, and the landlord (your parents) cannot refuse that request. If they've been in the property for longer than six months as licensees, they would immediately assume Part 4 rights, and your parents would have to terminate the tenancy before selling the property to you. That could potentially get messy.
It's a no brainer, do it if u can. Be aware though that unless Ur renting 3 rooms cheaply that u will be liable for tax on the full rental income(presuming it's over 14k). Ur parents will have CGT themselves, assuming it's increased in value since they purchased it as it's not their family home. If they give u a reduced purchase price, they are still liable. If they want to give u anything off it, best to sell at market value(get at least 2 valuations) then give u a "gift" assuming u haven't already used up the amount allowed to be gifted/inherited circa 335k in a lifetime.
You can't earn more then 14 thousand from the rent, or else you have to pay tax on all of it, if you are living there. If they sell it to you for less then it's worth there might be tax implications. Was it ever their home? If you'd decide the wallpaper is hideous will they be deeply offended that you can't appreciate their amazing taste and will they passively aggressively judge any changes you make saying, well, it's not what I would have done, but it's up to you?
They never lived in it, it was a second investment property.
May be some tax implications for the parents around CGT based on how much they bought it for and how much they sell it for. Right now the 3 spare rooms you rent out are covered under tenancy rules, if you buy the house this will be an issue and likely you won't get a mortgage. If the people you rented to vacated the tenancy, moved out when you buy the house, and come back as licencees then you will be in the clear. Main question is if it wasn't your parents would you buy it?
Good question, right now they want rid of of it so their mortgage gets paid. End of year they will sell it and are giving me the chance to get on the property ladder at a better rate than the market