Inherited house

rsynnott

Okay, in which case it'd be unreasonable for the parents to expect the kids to hold onto it, really. I dunno, is it normal to expect your kids to keep your house, even when it's unsuitable? Most families have more than one child, so it wouldn't be practical anyway.

beauf

Blut2 wrote: »

Its nothing to do with judgemental morality, though. Its the fact that revenue generation for the state is a zero-sum game. If inheritance tax is reduced, then income tax will go up to compensate.

So the question becomes - which is a fairer way for the state to raise revenue? Via income tax on earnings, or inheritance tax? If you think inheritance tax is wrong at the level its currently at, would you support an increase in income tax rates instead to compensate for its reduction?

Generally speaking, taxing inheritance is viewed as good for society because it a) does not discourage work, the way income tax can and b) at present levels it targets only those receiving the equivalent of almost 11 years of median income. ie those highly likely to be financially comfortable after receiving the inheritance.

No one seems to want to talk figures.

Income tax take was 47.86bn in 2016.

Mr Hayes obtained figures which show that over 50pc of inheritance tax is paid from the Dublin area. Some €168.3m was paid by Dublin residents in 2014. This was out of a total of €328m. The next largest amount was paid in Cork, but it was considerably less at €27.6m.

New figures provided by Fianna Fáil’s Michael McGrath show that the yield from Capital Acquisitions Tax, which is applied to gifts and inheritances, has increased by over 65% since 2011.

So say 540 million.

Would I prefer it came from income tax. Yes. Its only taxed once then, and not so anti-Dublin bias. Personal choice perhaps.

http://www.thejournal.ie/inheritance-tax-2943004-Aug2016/

LirW

You'd be surprised, plenty of people would be very upset if the children are getting vocal about not keeping it. This is quite often the drama behind the 'one child wants to keep the house and has to pay the other siblings out' scenario. My own granny, who's living in a house that's so massive you could house 3 families in it, was thinking of gifting it to the first person wanting to keep it.
I'm talking about a house that's so big it has a 900 euro electricity bill in winter when it's very cold (alpine winters though).

conorhal

rsynnott wrote: »

"Buying" a house worth 600k for 95k? I'd be pretty happy with that if it was me.

What if it isn't buying a house though? It's buying your family home. The place you grew up in, where you want your kids to grow up in.
I think the very worst thing that happened to this country was to notion that arose some time in the 2000's that a house is an 'asset' rather than a home, a place to raise kids, be part of a community and a place that provides security of shelter and a sense of place. That is the meaning of 'home' to me. Not some asset to be realized or a cash cow to governments to keep the populous on an endless treadmill of debt to the state.
IMHO no family home should be subject to inheritance tax.

beauf

rsynnott wrote: »

....And, again, look at the distortion on the property market. The person with comfortably-off parents and no siblings, or well-off parents and a sibling or two, inherits 310k, tax free. How are people with less well off (or indeed merely longer-lived) parents supposed to compete with that?....

There is no way of balancing that regardless of how you increase the tax.

rsynnott

LirW wrote: »

You'd be surprised, plenty of people would be very upset if the children are getting vocal about not keeping it. This is quite often the drama behind the 'one child wants to keep the house and has to pay the other siblings out' scenario. My own granny, who's living in a house that's so massive you could house 3 families in it, was thinking of gifting it to the first person wanting to keep it.
I'm talking about a house that's so big it has a 900 euro electricity bill in winter when it's very cold (alpine winters though).

So essentially, people are keeping houses that they don't really want and can't afford to make properly habitable. That definitely sounds like a strong argument for inheritance tax to me; it would get those houses back on the market. I don't want to sound heartless, but it's not practical to have people taking up and underutilising housing in Dublin for sentimental reasons. There's a property crisis.

beauf

conorhal wrote: »

What if it isn't buying a house though? It's buying your family home. The place you grew up in, where you want your kids to grow up in....

I think we have to accept that many people will priced out of their area they grew up in. The Ireland of communities and generations living in the same area, is fading fast. We are moving to be very like London.

LirW

I agree with what you're saying, a big problem is elderly people living in accommodation that's way too big for their needs. Unfortunately there isn't much of a supply on smaller housing for them when the day comes. Another problem is just the drip-feeding of certain areas. Lots of people bought a house that is now in an expensive area, let's say for example people that live in Drumcondra. Drumcondra has a huge population that's elderly and with the current crisis a few houses in an expensive area won't make much of a difference.
If you take a more working class area like the eastern part of Finglas, where also a lot of elderly people died out of their houses recently. These areas experienced a horrible rise in prices because it's not happening on a large scale but the market is drip-fed and a lot of people are still looking to buy and it's one of the more affordable areas for FTBs.

Honestly the more I think about it the more I'm uncertain about my opinion to it. I do see both sides of it really, it very much depends on which situation you are going to experience later in life.

conorhal

rsynnott wrote: »

So essentially, people are keeping houses that they don't really want and can't afford to make properly habitable. That definitely sounds like a strong argument for inheritance tax to me; it would get those houses back on the market. I don't want to sound heartless, but it's not practical to have people taking up and underutilising housing in Dublin for sentimental reasons. There's a property crisis.

Yeah, but how many people does that scenerio actually represent? And should everybody else pay the price for, what I suspect is a tiny minority?

Here's a completely mad notion, but hear me out. How about government sorting out the property crisis by prioritizing a policy that ensures affordable housing for it's citizens, rather than creating crisis after crisis that does the opposite and punishing people, relentlessly, for not wanting to be pensioners worrying about paying rent to vulture funds?

beauf

rsynnott wrote: »

So essentially, people are keeping houses that they don't really want and can't afford to make properly habitable. That definitely sounds like a strong argument for inheritance tax to me; it would get those houses back on the market. I don't want to sound heartless, but it's not practical to have people taking up and underutilising housing in Dublin for sentimental reasons. There's a property crisis.

The property crisis is mainly about social and affordable housing, and primarily in urban areas. Those people will not be able to afford these houses either. If you can afford them, you can probably buy something now, if you have the money.

beauf

LirW wrote: »

I agree with what you're saying, a big problem is elderly people living in accommodation that's way too big for their needs. Unfortunately there isn't much of a supply on smaller housing for them when the day comes. ...

Its not even that its smaller. Its needs to be suitable for them. Accessibility, access to their community of family and friends, their GP, clinics etc. Ripping an older person out of their community to an alien location, make its highly likely they will become dependent on state supports. Even something simple like family staying over becomes a problem. It may be cheaper to keep them in their home.

rsynnott

LirW wrote: »

I agree with what you're saying, a big problem is elderly people living in accommodation that's way too big for their needs. Unfortunately there isn't much of a supply on smaller housing for them when the day comes. Another problem is just the drip-feeding of certain areas. Lots of people bought a house that is now in an expensive area, let's say for example people that live in Drumcondra. Drumcondra has a huge population that's elderly and with the current crisis a few houses in an expensive area won't make much of a difference.
If you take a more working class area like the eastern part of Finglas, where also a lot of elderly people died out of their houses recently. These areas experienced a horrible rise in prices because it's not happening on a large scale but the market is drip-fed and a lot of people are still looking to buy and it's one of the more affordable areas for FTBs.

Honestly the more I think about it the more I'm uncertain about my opinion to it. I do see both sides of it really, it very much depends on which situation you are going to experience later in life.

I think part of it is a cultural thing, in that we tend not to move when we're older in this country, even though in many cases it'd be far more practical. Most older people with, say, a 3 or 4 bed semi probably could find something smaller, cheaper, and easier and cheaper to maintain and run (and potentially one storey, which can be a lot more practical for elderly people) in their area, but Irish people just don't downsize all that often. Maybe people just get too attached to a particular house...

conorhal

beauf wrote: »

I think we have to accept that many people will priced out of their area they grew up in. The Ireland of communities and generations living in the same area, is fading fast. We are moving to be very like London.

IMO that's a very bad thing. Satellite commuter communities are awful, disconnected, soulless places. Human warehouses rather than communities, bad for families and bad for society at large. For the past 20yrs governments have been destroying communities and has proved nothing but an expensive negative.

LirW

I never said that they should be relocated, some just want to and simply don't find anything. Our former neighbors split up when he was in need of care, sold the house, he moved in a small apartment that's suitable for his new situation and she's still looking for something and has a hard time finding something since she's a lot better off physically than he is.

How is it actually handled when parents are split up, live in 2 different houses and both die, does the threshold count per house or per family (parental couple)?

awec

conorhal wrote: »

What if it isn't buying a house though? It's buying your family home. The place you grew up in, where you want your kids to grow up in.
I think the very worst thing that happened to this country was to notion that arose some time in the 2000's that a house is an 'asset' rather than a home, a place to raise kids, be part of a community and a place that provides security of shelter and a sense of place. That is the meaning of 'home' to me. Not some asset to be realized or a cash cow to governments to keep the populous on an endless treadmill of debt to the state.
IMHO no family home should be subject to inheritance tax.

A home is still a property, just with sentimentality attached. At the end of the day it's the same thing, an asset that has a value that can be sold in almost all cases for a huge profit for the benefactor.

It may be interesting to know how many people move into property that they inherit for these sentimental reasons and subsequently use it as their main residence, but I would guess it's very much a minority and that in the majority of cases the houses are treated like any other asset and are either sold or rented out, in which case this whole "it's where I grew up" thing doesn't hold much water.

And if it's already your main home before it's passed on you are exempt anyway.

rsynnott

LirW wrote: »

I never said that they should be relocated, some just want to and simply don't find anything. Our former neighbors split up when he was in need of care, sold the house, he moved in a small apartment that's suitable for his new situation and she's still looking for something and has a hard time finding something since she's a lot better off physically than he is.

How is it actually handled when parents are split up, live in 2 different houses and both die, does the threshold count per house or per family (parental couple)?

As far as I know, the threshold is per group. So, parents are group A; if you inherit the full threshold from one parent and then inherit something else from the other parent, I think you do pay 33% on the second inheritance. Of course the thresholds change over time; there are rules for dealing with this on the revenue website.

conorhal

rsynnott wrote: »

I think part of it is a cultural thing, in that we tend not to move when we're older in this country, even though in many cases it'd be far more practical. Most older people with, say, a 3 or 4 bed semi probably could find something smaller, cheaper, and easier and cheaper to maintain and run (and potentially one storey, which can be a lot more practical for elderly people) in their area, but Irish people just don't downsize all that often. Maybe people just get too attached to a particular house...

Attached to a particular house or attached to their home? The dissociation of a house from a home really disturbs me. I look at my folks, their home is where they raised their kids, where they are part of their community, where their neighbours look in on them, where their parish is, where the want to be when they die. They have no desire to be warehoused somewhere alien to them, dislocated and disconnected from where they are happy and comfortable and cared for. They aren't the problem, they are the kind of people scapegoated for poor government policy. In the 50's and 60's our government built tens of thousands of houses per year, when we hadn't an arse in out trousers. In 2015 the government built less than a hundred. But yeah, screw pensioners that refuse to be ground into soylent green!

rsynnott

To be clear, I'm suggesting that it might make sense for some people to move to a smaller more practical home in the same town, not another area.

1874

Who does a person approach about this for advice? is it an accountant? or a solicitor? or both. Initially Im thinking tax implications, but does that come under an accountant in this circumstance or some other financial advisor?
Ive an immediate family member that is older and I think they could do with tax advice, but despite some suggestions, they seem to avoid dealing with the situation, which I can understand to an extent, but in particular as relative stays in their house, I can see this in itself may cause problems later on as Im already concerned about that relationship and that its far less than perfect. Im trying to think of the most sensible and sensitive way to approach them as the last I was told I am the executor of the will.
Im also trying to see if there is a way that they might access some of the equity in their property and Ive begun to wonder about how they might fund public care if they require it in the future.

conorhal

rsynnott wrote: »

To be clear, I'm suggesting that it might make sense for some people to move to a smaller more practical home in the same town, not another area.

But where is that government policy? Nowhere. Because that would require joined up thinking. I'd be right behind a policy that built smaller affordable apartments in every community that the elderly could downsize to, but didn't require the intensive needs of a care home.
It would allow their children to take up residence in the homes they vacated which in turn would free up rental properties for people and allow families to stay in communities where they had the childcare support of parents nearby.

But that's not a policy. It's not a policy because government isn't interested in communities and it isn't interested in families and it lacks an any kind of forethought or joined up thinking, which is costly in the long run because commuter belt children that live too far from their parents to care from them in their old age and parents too far from their grandchildren to provide support are costly to the state, a fact they don't seem to consider.

Graham

conorhal wrote: »

But where is that government policy?

It's going to take a fairly bold government to suggest the generally untouchables are in any way incentivised to right-size their accommodation.

Peregrinus

conorhal wrote: »

But where is that government policy? Nowhere. Because that would require joined up thinking. I'd be right behind a policy that built smaller affordable apartments in every community that the elderly could downsize to, but didn't require the intensive needs of a care home.
It would allow their children to take up residence in the homes they vacated which in turn would free up rental properties for people and allow families to stay in communities where they had the childcare support of parents nearby.

But that's not a policy. It's not a policy because government isn't interested in communities and it isn't interested in families and it lacks an any kind of forethought or joined up thinking, which is costly in the long run because commuter belt children that live too far from their parents to care from them in their old age and parents too far from their grandchildren to provide support are costly to the state, a fact they don't seem to consider.

Well, I think there's a little bit of wishful thinking going on here.

A few years back my parents moved out of the largeish home in which they had raised their family and into a smaller home more suited to their needs. None of their five children move into the vacated home; we have jobs, and our childre are in schools, and our spouses have their own elderly parents, and etc, etc, and where we choose to live is affected by all those considerations. And I think that would be fairly typical. Plus, Irish people have a strong preference for home ownership, not for living in homes owned by their parents.

Building regulations do require that new homes (which tend to be smaller than older homes) are constructed with an eye to accommodating people with limited ability or mobility so, in the future, there will be a ready supply of moderately-sized homes that are suited to the needs of elderly people. And the tax system is already kind to someone who sells a large home and buys a smaller one; their CGT bill is typically nil, and you can't reduce it any further than that. But I doubt that there's any further legal or administrative changes you can make that would be effective in encouraging their adult children to move into the home they are leaving.

The_Conductor

beauf wrote: »

The property crisis is mainly about social and affordable housing, and primarily in urban areas. Those people will not be able to afford these houses either. If you can afford them, you can probably buy something now, if you have the money.

What you're saying- is the public perception, and is what is peddled in the media. Unfortunately, its also a fiction- and useful fiction, but a fiction, nonetheless.

According to the CSO (based on census figures)- there are over 700,000 Irish people, the majority of whom are owner occupiers, living in unsuitable and overcrowded conditions. The figure of 735,000 includes a majority of whom are minors under the age of 15.

With the best of will in the world- this cohort of people rival the numbers of those on social/affordable housing- and indeed, may very well be augmented by those on social and affordable housing lists- as their situations/circumstances evolve.

This cohort of those living in inappropriate/overcrowded accommodation- are the forgotten group- who don't garner any media attention for several reasons- they're in work, and they're owner occupiers. They bought into the whole 'starter home' lark last time around- and have ended up stuck because of it.

beauf

By mainly I meant people in greatest need. Not that there are not large numbers of other people wanting to move but can't.

I see places available for sale but they are all at the upper end of the market for 3,4 and 5 bedroom houses. Even a few bungalows but they are more expensive than the houses people want to downsize from. But if you were well off you could move.

All the new building I've seen is the same as above.

CIARAN_BOYLE

Graham wrote: »

It's going to take a fairly bold government to suggest the generally untouchables are in any way incentivised to right-size their accommodation.

Not to go off into politics but the government can't even move social housing residents into right sized accommodations.

I known of one lady who is widowed, raised 4 kids in a house who are all out of the home and she continues to live in what was her family home and will do so for the rest of her life.

Surely right sizing social housing residents would be a positive step towards making right sizing properties for the elderly a cultural norm.

beauf

There's more to it than just downsizing.

Graham

CIARAN_BOYLE wrote: »

Surely right sizing social housing residents would be a positive step towards making right sizing properties for the elderly a cultural norm.

+1

I'd be broadly supportive of any policy that encouraged/incentivised right-sizing across the housing spectrum.

rsynnott

beauf wrote: »

By mainly I meant people in greatest need. Not that there are not large numbers of other people wanting to move but can't.

I see places available for sale but they are all at the upper end of the market for 3,4 and 5 bedroom houses. Even a few bungalows but they are more expensive than the houses people want to downsize from. But if you were well off you could move.

All the new building I've seen is the same as above.

So, if there are more 3 bed houses, then it will be easier for people currently occupying a 2 bed apartment with a couple kids or whatever to move, thus freeing up the 2 bed apartment for a couple without kids or with one kid. Expanding supply at one end of the market should filter through (unless it's the ultra-high-end, which is largely in a world of its own).

Of course, we'd need to be building somewhere for downsizes to go, but if it was common for elderly people to sell up and move to something smaller in the same area, that'd create a clear demand for a certain type of accommodation (mostly apartments, probably; no stairs is a big advantage as you get older), and hopefully spur building.

Lumen

Graham wrote: »

+1

I'd be broadly supportive of any policy that encouraged/incentivised right-sizing across the housing spectrum.

Bit off-topic, but hasn't worked out so well in the UK.

https://en.wikipedia.org/wiki/Under-occupancy_penalty

"In August 2013 The Independent newspaper released figures that it argued show that 96% of people that will be affected by the changes are not able to move due to the lack of available social housing...The under-occupancy penalty has been criticised for potentially costing more than it saves by forcing individuals into the private rented sector where rents are higher thereby increasing the cost to the taxpayer"

rsynnott

Lumen wrote: »

Bit off-topic, but hasn't worked out so well in the UK.

https://en.wikipedia.org/wiki/Under-occupancy_penalty

"In August 2013 The Independent newspaper released figures that it argued show that 96% of people that will be affected by the changes are not able to move due to the lack of available social housing...The under-occupancy penalty has been criticised for potentially costing more than it saves by forcing individuals into the private rented sector where rents are higher thereby increasing the cost to the taxpayer"

Yeah, that's very much a stick approach as opposed to a carrot one. In particular, in many (most?) cases, no appropriately-sized accommodation was made available. I don't think it was particularly well-thought-out.