Your property questions answered
Release some equity
My parents, who own their house outright, have agreed to release some equity from their home to enable my fiance and me to put a deposit on our first home. The SHIP scheme has been heavily advertised and we have looked into that but are there other options?
The fact that you have looked into SHIP would suggest that your parents are in the age category targeted by these equity release products. SHIP (or Shared Home Investment Plan) pays a lump sum to couples aged 70 or over (or a single person aged 68 or over) in exchange for a share in their home.
Houses should be in good condition and worth at least €200,000. SHIP will buy 25-90 per cent of the property and it has a fixed share contract or a variable share contract. There are two other financial products that you could look into: Bank of Ireland's Life Loan and Residential Reversions Investments Limited (RRIL).
Under the Life Loan customers borrow up to a certain percentage of the value of their home through a 15-year fixed-rate loan. At the end of that period, the loan (with interest added) has to either be repaid or customers are offered a new fixed rate or a variable rate. If your parents are between 65 and 69 they can borrow up to 20 per cent of the value of their home, people over 80 can borrow 30 per cent.
Under RRIL people over 70 with houses worth at least €190,000 can, in exchange for a part share in the house, get a lump sum, a regular cash payment or a combination of both. When the owners die or otherwise leave the house it is sold at market rate and the proceeds are divided between RRIL and the owner or his estate.
The amount your parents will receive under this scheme will be less than the market value of their home and a minimum investment of 25 per cent of the open market value is required to the value of at least €85,000. This is a big step for your parents and they should get independent legal advice when comparing how each scheme might work for them - as you are an interested party you are probably not the right person to advise them - and if you have any siblings they should be informed about what is going on as this will impact greatly on their possible inheritance.
Retire in Ireland
As a US citizen who reads your paper online could you tell me if there is any legal prohibition on US citizens buying a house in southern Ireland. I hope to retire there in the next two years. Also if I can buy in Ireland what property taxes will I face?
No, there is no prohibition on you as a US citizen (or anyone else for that matter) buying in Ireland. The main tax facing all house buyers is stamp duty and that varies depending on the value of the house.
There will be other taxes involved in the purchase such as VAT (value added tax) on professional services, such as solicitor's fees, surveyors fees, etc. There is no annual property tax. For a good grounding in what's involved look at www.oasis.gov.ie - a consumer information website run by the Government.
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Unfortunately, it is not possible to respond to all questions received. The above is a representative sample of queries received. This column is a readers' service and is not intended to replace professional advice. No individual correspondence will be entered into.
