swapping house with parents

westmeathDude

Hi All

Quick question..

I drew down a mortgage and bought a house in westmeath 18 months ago...

My parents own their house outright and live in Dublin...

They would like to swap houses with me (they are originally from the country) and I would be closer to my kids in dublin and have less of a commute to work..

My parents house would be more valuable (but not by much about 20-30k) but they would do a straight swap...

Is this something that the bank would agree on?
What other things would I have to take into account?
Would I have to pay taxes/stamp duty etc.

Any advice would be appreciated.

Michael D Not Higgins

Is this something that the bank would agree on?

Not a straight swap no.

What other things would I have to take into account?

Conveyancing, stamp duty, mortgages, capital acquisition tax, etc.

Would I have to pay taxes/stamp duty etc.

Yes.

ittakestwo

Do you have siblings? These sort of things can be toxic to family relationships down the line.

westmeathDude

ittakestwo wrote: »

Do you have siblings? These sort of things can be toxic to family relationships down the line.

Yes I have siblings but I'm swapping for house for house and I would own part of my parents house anyway, so I can't see a problem in this situation

Interested Observer

westmeathDude wrote: »

Yes I have siblings but I'm swapping for house for house and I would own part of my parents house anyway, so I can't see a problem in this situation

You would own part down the line but they would own the rest. You've also said above the house you'd be swapping into is more valuable than your own so that difference in value is something that only you're benefiting from and not your siblings.

westmeathDude

Interested Observer wrote: »

You would own part down the line but they would own the rest. You've also said above the house you'd be swapping into is more valuable than your own so that difference in value is something that only you're benefiting from and not your siblings.

Yes and I would forego my share in the house which imho would easily cover the short fall of the market value of my parents house... this is not related to my original question...
please reply to my original question!
Thanks

Grawns

Not straightforward as you don't own your house, the bank owns it! If you owned it outright you would have to get valuations for the revenue as you would both be subject to stamp duty on the purchase/change of ownership of the houses. Any gain to you as in the €20, to €30 thousand difference in value could be gifted to you by your parents.

The_Conductor

westmeathDude wrote: »

Yes and I would forego my share in the house which imho would easily cover the short fall of the market value of my parents house... this is not related to my original question...
please reply to my original question!
Thanks

There is no need to be shirty with the Interested Observer.

The short and simple- you cannot do a straight property swap any longer.
You could do this- up to 2001- the then Finance Minister (Charlie McCreevy) ended that clause.

You have two issues- first off- you have a contractual obligation with your lender on the property in West Meath- they cannot legally move this obligation to a different property. It would involve clearing the mortgage on one property and simultaneously mortgaging the second property.

You would both be liable to stamp duty and legal costs- and obliged to use a different solicitor.

You have your siblings to consider- regardless of how above board this might appear to you and/or your parents- its pretty much inevitable that you'll have one or more siblings that just won't subscribe to this.

The only way of doing this- would be to do it in a fully transparent manner- however, I strongly suspect, contrary to your assertion- that the difference in value between the properties- could be significantly more than you're suggesting. It just doesn't ring true.

westmeathDude

Apologies if I sounded shirty

and thanks for the answer

I recently got my house valued at 170k and houses similar to my parents house are on daft for 190/200k but you are entitled to your own opinion!

My intention was for full transparency regarding my siblings and I don't see what this has got to do with my original question, I was asking for advice on the house swap situation...

Anyway thanks

sKeith

can you not just live in their house and they live in your house without making anything official or changing onwership.

The_Conductor

Do a formal transaction- and accept you're going to have various transactional fees associated with everything- solicitors fees, stamp duty etc.
The reason people are saying that you're liable to have issues with siblings- is because many of us have been down that road, and learnt the hard way- that no matter how transparent we think the transaction is- in the absence of doing it formally- its a minefield. It actually comes up in the forum on a regular basis (the moderators have had discussions with another poster about just this aspect of it- this morning- it possibly comes up 2-3 times every month...........

I'm not sure where the properties are- but the prices aren't representative of average prices for working class areas in either Westmeath- or Dublin- that was what I meant when I suggested that the price differential didn't ring true.

I'm going out on a limb- but I would suggest you have a look at the deeds for both properties- if either were ever local authority properties- they may very well have binding covenants built into their title deeds- that you should be aware of. Just something to keep in mind.

You will get a wealth of experience- not professional- salt of the earth of experience- from people who have tried to do most things in the past- in this forum- if you seek it. It may not always strictly keep with the narrow remit of your question- however, that doesn't mean its not valid- and given the hell some people on this forum have been through- while you might be lucky- you'd be well advised to try and educate your as to the possible pitfalls associated with various courses of action.

Raging_Ninja

sKeith wrote: »

can you not just live in their house and they live in your house without making anything official or changing onwership.

What happens when the parents pass away and the estate has to be handled? All children are entitled to a share, so the OP could be forced to move out of the Dublin home.

sKeith

Raging_Ninja wrote: »

What happens when the parents pass away and the estate has to be handled? All children are entitled to a share, so the OP could be forced to move out of the Dublin home.

Yes, but he still has his Westmeath house to move back into then, and can then arrange to buy the siblings outright if he wishes.

Raging_Ninja

sKeith wrote: »

Yes, but he still has his Westmeath house to move back into then, and can then arrange to buy the siblings outright if he wishes.

That's assuming the siblings will be reasonable - I don't know the OP's circumstances but from personal experience things can get shockingly out of hand very quickly if you decide to go down the "it'll be grand" route. Not to mention possible inheritance tax bills.

Better to get it done and dusted early and not deal with the problems later.

mdebets

sKeith wrote: »

can you not just live in their house and they live in your house without making anything official or changing onwership.

Wouldn't that attract gift tax to be paid by both parents and children for the rent not paid (depending on how high the rent would be for a comparable house)?

Eric Cartman

its a damn sad state of affairs that you can't just swap properties of similar value with one sit down with a solicitor and a small fee.

This thread just shows how awful we've become with taxation and bureaucracy