Sister on social welfare living in our second house rent free.

greggharris

My wife and I recently purchased a second home near her parents. We have decided to allow her sister to live there rent free. The sister is a vulnerable adult and is on social welfare.

I am just wondering what are the tax implications for either us or her.

Any advice would be greatly advised.

L1011

There are reliefs on CAT for maintenance of a dependent relative, which may apply here - you would need to talk to a tax accountant experienced in this

Otherwise, she is liable for 33% CAT, on the market rent minus 6k - two 3k small gift exemptions. She also has lifetime CAT group limits by which the rest of the market rent could be gifted until these groups are exhausted.

greggharris

https://www.boards.ie/discussion/comment/121639827#Comment_121639827

Thank you

greggharris

Is it possible to charge a nominal amount of lets say €100 a month for this house and for us to take the hit on the tax, rather than her, in the above scenario.

Thanks again

L1011

https://www.boards.ie/discussion/comment/121640130#Comment_121640130

The gap between nominal and market is still a gift and taxable

She would presumably qualify for some form of rent supports for a larger but I'm not sure how to go down that route without it looking dodgy

Mrs OBumble

Does your house insurance company know that you are allowing a vulnerable adult to live there unaccompanied?

lbunnae

https://www.boards.ie/discussion/comment/121640643#Comment_121640643

Jesus you sounds like a bolix.

https://www.boards.ie/discussion/comment/121640674#Comment_121640674

😀 well said

cnocbui

https://www.boards.ie/discussion/comment/121640130#Comment_121640130

Are you sure this is social welfare and not a disability pension?

I know someone receiving the latter, and it wouldn't be sufficient to even pay the going rate for rent in the first place, so it would be monumentally insane, even for this fu*ked up country to consider someone who the state isn't funding adequately is liable for tax greater than the pension they are paying them.

That being said, it might be worth talking to a solicitor and see if there is an angle on this for sibling rather than child:

https://www.irishstatutebook.ie/eli/2014/act/37/enacted/en/print#sec81

a child of the disponer, or of the civil partner of the disponer, who is more than 18 years of age but not more than 25 years of age and is receiving full-time education or instruction at any university, college, school or other educational establishment, or who, regardless of age, is permanently incapacitated by reason of physical or mental infirmity from maintaining himself or herself

If there is an organised body that supports the disability in question, such as https://autism.ie/ and talk to them as they would likely be more knowledgeable.

Alternatively, the sister actually pays you rent and then you gets rent assistance from social welfare.

Then there is another possible angle of making the house available to vetted Ukrainian refugees (all female) and then you get €800 a month and the sister wouldn't be up for the full rent liability.

Furze99

https://www.boards.ie/discussion/comment/121640674#Comment_121640674

Maybe stated bluntly but it could be an issue. Insurance companies love taking your premiums but are a lot slower to pay out when there's any query. Fair dues to OP and spouse.

Wanderer78

https://www.boards.ie/discussion/comment/121640643#Comment_121640643

https://www.boards.ie/discussion/comment/121642749#Comment_121642749

...jesus christ lads, seriously!

cnocbui

https://www.boards.ie/discussion/comment/121642849#Comment_121642849

I'm not a 'lad' and if you were addressing the civil servants trying to gouge tax from a situation like this, then I'd agree with you. If you have any helpful suggestions yourself, I'm sure the OP would be interested in hearing them.

cnocbui

https://www.boards.ie/discussion/comment/121642832#Comment_121642832

You don't have to have insurance. Until recently, I had a holiday home that was essentially uninsurable so it went uninsured for a couple of decades. I don't have my house insured.

Wanderer78

https://www.boards.ie/discussion/comment/121642887#Comment_121642887

...ohh you poor thing, i hurt your feelings!!!

whats actually required for this situation is empathy and compassion, our critical social systems for such a situation have in fact failed, this is what actually leads to families into these situations, so please be an emotionally mature adult.....

...its great the familiy realise that independence is critical for such as person, but again, our current national situation doesnt allow this in many situations, but the family have the ability to do so, many simply dont....

lbunnae

https://www.boards.ie/discussion/comment/121642832#Comment_121642832

I think the stated bluntly was the reason for my comment. Op doing a good deed as ya say , fair dues.

cnocbui

https://www.boards.ie/discussion/comment/121642914#Comment_121642914

My son, who is an adult, has aspergers and lives with me. There is another related angle to this I won't mention publicly but relates to the OP's situation. Implying that I am not compassionate is a stupid slur.

Wanderer78

https://www.boards.ie/discussion/comment/121642957#Comment_121642957

...ah special like myself so, i do apologies, but these type of situations do tend to be very complicated, its important not to be judgmental....

elperello

https://www.boards.ie/discussion/comment/121642899#Comment_121642899

That might have worked out for you but its not a good idea to have no insurance.

A house you own but don't live in and is occupied by someone else really should have an insurance policy.

You are not there to control the property and regulate its use.

In the event of a visitor suffering an injury due to some neglect on the part of the owner IE. yourself, you could be in trouble.

Mrs OBumble

https://www.boards.ie/discussion/comment/121642920#Comment_121642920

If you don't like blunt, please put me on Ignore.

Maybe the OP can afford to take the risk of leaving a house uninsured. More likely, they can't, or don't want to. As mentioned, if there's an injured visitor or tradesperson, or damage to neighbouring house, a claim can be costly. This applies even if the property owner is not at fault, because if there's a claim they have to get legal representation.

If there's a premium loading because of the situation, it needs to be considered as part of the overall tax situation. If the house is uninsurable because of it, then specialist tax advice should definitely be sought.

Welfare as well as tax considerations definitely need to be thought about, including what happens later if the OP needs to sell the house for some reason. If the potential tenant is eligible for social housing, she should be on the list so that society can support her properly instead of relying on the (laudable, but sometimes troublesome) charity of a family member.

lbunnae

https://www.boards.ie/discussion/comment/121643896#Comment_121643896

I only read the first line, cheers. Done.

endacl

https://www.boards.ie/discussion/comment/121640674#Comment_121640674

Wouldn’t worry about it. They scour this site searching for the slightest opportunity to sound like a bollix. Treat it as background noise.

holliehobbie

https://www.boards.ie/discussion/comment/121642899#Comment_121642899

I really hope you don’t have neighbours

cnocbui

https://www.boards.ie/discussion/comment/121645001#Comment_121645001

I don't. 8-)