Buying part of a house?!

HB2002

Hi,
I'm currently living at home with my elderly parents.
It's unlikely at my stage of life that I will be moving out and my parents have told me that they will be leaving me the house in their will, but that I will have to share the value of the house with my three sisters equally.

That's completely fair and we are all happy with the arrangement that I would pay them . The problem is that I wont be in a position to get a mortgage for the kind of money that would be needed to give my sisters their share. And hoping that my parents are with us for a long time yet the value of the house and my age will all work against me.

The option we are considering is me buying 3/4's of the house now and giving that money to my sisters so that I own part of the house and inherit the rest in the will.

This seems like a plausible solution once we agree on the amount I need to pay but are there any issues that we're not thinking of?

Obviously the value of the inheritance for my sisters is lower now than it would be when my parents pass away but they do get the benefit of getting to use their inheritance earlier.

Any advice from people in similar situation would be greatly appreciated.

.......

This post has been deleted.

HB2002

I think we would have to involve everyones solicitors and have it all agreed that the final portion of the house is my share of the inheritance.

I do hope my parents live for many years and God being good they will.
But if we wait till until both my parents pass away I will be willed the house and the obligation to pay 3/4's of the value of the house to my sisters.

With the house market as it is it is a pretty safe bet to say the house will be worth significantly more than I will be able to raise. I most likely will be too old to get a mortgage and that would mean the house has to be sold and I would be left homeless.

Maybe it's just a case of trying to cover all eventualities with our solicitors.

.......

This post has been deleted.

Addle

What if you die before your parents?

Riskymove

HB2002 wrote: »

The option we are considering is me buying 3/4's of the house now and giving that money to my sisters so that I own part of the house and inherit the rest in the will.

can you not buy the house for 3/4 of the value and become full owner now?

let the money your parents get be gifted or left to your sisters.

Addle

Riskymove wrote: »

can you not buy the house for 3/4 of the value and become full owner now?

let the money your parents get be gifted or left to your sisters.

How is the parents life interest protected?
Would you get a mortgage when someone else has right to property?

Would anyone give you a mortgage for 3/4 of a house?

Could you buy an equivalent house now that could be sold to pay out inheritance?

Could you actually afford to buy this house?

cobhguy28

HB2002 wrote: »

Hi,
I'm currently living at home with my elderly parents.
It's unlikely at my stage of life that I will be moving out and my parents have told me that they will be leaving me the house in their will, but that I will have to share the value of the house with my three sisters equally.

That's completely fair and we are all happy with the arrangement that I would pay them . The problem is that I wont be in a position to get a mortgage for the kind of money that would be needed to give my sisters their share. And hoping that my parents are with us for a long time yet the value of the house and my age will all work against me.

The option we are considering is me buying 3/4's of the house now and giving that money to my sisters so that I own part of the house and inherit the rest in the will.

This seems like a plausible solution once we agree on the amount I need to pay but are there any issues that we're not thinking of?

Obviously the value of the inheritance for my sisters is lower now than it would be when my parents pass away but they do get the benefit of getting to use their inheritance earlier.

Any advice from people in similar situation would be greatly appreciated.

Simple solution setup a savings account. Put the monthly amount that a mortgage would cost into it. Then when you inherit your portion, you will easily get a mortgage. In fact you save money because you if you took a mortgage now most of the repayments at the start go on interest.

Pat Mustard

HB2002 wrote: »

The option we are considering is me buying 3/4's of the house now and giving that money to my sisters so that I own part of the house and inherit the rest in the will.

If you don't have the money to buy the full house, don't buy a three quarter interest in the house.

In any property transaction, you need either the money or the control over the property. If you hand over the money, you expect to get control over the property.

You don't propose to do that here. You intend to borrow money and hand it over. You would not gain full control over the property. However, you would be saddled with a substantial debt with no easy way of selling up to discharge that debt.

This idea is fraught with all sorts of uncertainties, and ultimately depends on the cooperation of other people with competing interests. Also, those people are family members. You have not fallen out with them - yet. It really is not worth the risk of falling out with your family.

Also, what if your circumstances change and you want to sell up and move on? It's not going to be at all straightforward to get out of that situation. Far from it.

It's a bad idea and you should run a mile. I seriously doubt that the bank would give you the money for this, either.

Take cobhguy28's advice and start saving.

sword1

You seem to be presuming that the value of the house is going to rise alot in the near future? There are a lot of unknowns and as good a chance that there will be a drop in prices as rises. Save your money and be ready to buy something when the right opportunity comes up. Don't get drawn into buying a house that is not right for you or puts you under too much financial pressure for sentimental reasons.

Bandana boy

I Would be very careful and see an accountant , what you are suggesting sounds very tax inefficient.
Anything you give your sisters now above 30K will be liable to Capital Gains
By your inheriting the full house in X amount of years you could by the sounds of it break the parents allowance on a gift/inheritance and end up paying capital gains as well.

Mrs OBumble

cobhguy28 wrote: »

Simple solution setup a savings account. Put the monthly amount that a mortgage would cost into it. Then when you inherit your portion, you will easily get a mortgage.

Not necessarily. For example if the OP was over 50 by then, they may struggle to get anyone to give them a mortgage.


OP, something else to consider: if either of your parents need nursing home care, then the Fair Deal scheme treats their home vs cash-assets differently.

Mr. Incognito

Hello there,

I am going to go against the vein of the thread here.

It is possible to structure this in a sound way.

You will need to see a lawyer and a tax consultant.

It is possible to gift 3K to each of your sisters each year which equates to 9K. If your parents live for a period of time this can be considerable.

In addition, as you live with your parents Dwelling house relief may apply if the House is gifted to you alone which will allow you to receive the house free of tax.

http://www.revenue.ie/en/gains-gifts-and-inheritance/cat-exemptions-and-reliefs/exemption-for-dwelling-house/index.aspx

The part where you require legal and tax advice is the structure to your sisters as the 3K is not a gift but is in consideration of their interest.

As such it might not be possible to formalise the 3K a year for a disclaimer of their interest but once again, legally, now, they dont have any claim or interest bar what your parents intend to give to them so, it is in fact a gift.

Obviously this is an internet forum and you should not rely on this advice but consult a saavy solicitor and tax consultant and this may be a way to structure it now to avoid any tax implications that meets your requirements.

coylemj

Mr. Incognito wrote: »

As such it might not be possible to formalise the 3K a year for a disclaimer of their interest but once again, legally, now, they dont have any claim or interest bar what your parents intend to give to them so, it is in fact a gift.

Exactly, it would be a gift so legally there would be no strings attached. Any one or all of the sisters might be in constrained circumstances when the last of the parents die, they will have long since spent the 'gifts' the OP gave them and they might decide to be bloody awkward about the OP getting the house in the will.

And what no 'understanding' can prevent is that in 5, 10 or 20 years time, the surviving parent can go behind the OP's back and make a will leaving the entire house to one of the sisters. What does he do then - he would be out on the street with nothing!

Riskymove

Addle wrote: »

How is the parents life interest protected?
Would you get a mortgage when someone else has right to property?

How is the OPs interest protected currently?

Technically they can kick him out

You can however, enter into agreements giving people the right to reside

it was (is?) quite common when farms were passed on to children while parents were still alive and living with them