How can we finance elderly in-laws newbuild? / If I buy in Ireland am I tax-resident here too?
QMy parents-in-law have planning permission for a house in their large garden, but funding the build is an issue. My father-in-law who is 78 and on a state pension wants to stay in the old house until the new one is built. Ideally a loan would be obtained on the basis that it would be repaid when the new house is ready and the old one sold. The old house (excluding the site) has been valued over €400,000, and the cost for the new one at €200,000. To secure funding, is it possible to sell the old house on the basis that only the first contract is signed and the closing of the sale is on a guaranteed date of completion of the second house. Would the bank release €200,000 funding on this basis? What are the mechanics?
AIt's a tricky one and we're not sure that there's an easy solution. We asked a financial advisor and mortgage broker Liam Ferguson of Ferguson & Associates for his take on your problem and he points out that construction finance for projects such as this has become harder to arrange due to the property market slowdown. Not long ago, it might have been possible to arrange a loan of €200,000 with rolled-up interest and no repayments until the existing house is sold. Such finance is unlikely to be available today. It's unlikely also that a potential buyer of the existing house will be prepared to enter into unconditional contracts now, but not close until a new house has been built. One possibility he suggests is the Bank of Ireland life loan but Ferguson suspects that your in-laws may not be able to borrow enough.
Another possibility would be that you, the "children", raise an interest-only mortgage, secured on either the existing home, or as a stage-payment loan secured on the new property. The children would need to be in a position to qualify for a mortgage and make monthly interest repayments until the existing house is sold to repay the debt. The children could be named on the mortgage with the parents. You should take legal and tax advice and be aware that if your in-laws are in receipt of a non-contributory state pension, this may be affected by the profit from the sale of the home. The family home is not means tested for the purpose of the state non-contributory pension, but money in the bank is.
If I buy in Ireland am I tax-resident here too?
QI am considering buying property in Ireland. If I do, will I be treated as resident in Ireland for income tax?
AAccording to the Revenue the ownership of a property in Ireland will not make you resident for Irish tax purposes but could be relevant in determining a single country of residence under a double taxation agreement where the other tax treaty country is also claiming that you are resident there. Contact Revenue or your tax advisor for advice.
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