We can't meet the full mortgage payments - can we sell to our son?
Q Both my wife and I are social welfare pensioners, and we are paying interest-only repayments on our home mortgage. We re-mortgaged the house to keep our business going in 2005, but the business failed in 2013. We recently exited insolvency, and the only outstanding debt is a mortgage of €216,000 on the family home.
It is valued at €275,000. The repayments are €300 a month, which we can manage as I work part-time. The mortgage expires in 2022. There is no way we can afford capital and interest repayments, and we would not get a mortgage at our age. Our son working in Australia may be interested in buying the house and renting it back to us, but he would need to borrow €150,000. Is there any way to manage this? Our other son works in Ireland, and may also be interested in buying the home, but would need to borrow too.
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A If either of your sons qualifies for a mortgage then they can buy your house, according to the head of credit with MyMortgages.ie, Joey Sheahan.
If they are paying less than market value for the property, then the difference between the current value and the amount they are paying will be subject to Capital Acquisitions Tax (CAT).
Luckily for you and your sons, as per Revenue's Group A thresholds, a parent can gift a child up to €320,000 without any tax being due so in this case no tax would be payable.
Another option might be for you to approach your bank when your current arrangement is coming to an end and to enquire as to whether or not you could look at the mortgage-to-rent scheme or possibly propose a further insolvency arrangement through a personal insolvency practitioner (PIP).
Q I am reaching 60 in a couple of months and reviewing my pensions. Between 1981 and 1991, I worked with two different companies, one for four years and another for four-and-a-half years. Both pensions were non-contributory. My understanding is that there was a five-year rule at that time for preserving pension and transferring it onto another employer. Being young and naive at the time, I moved jobs easily with little regard to the pension consequence. I'm wondering if the two-year rule for preservation and transferring pensions that was brought in later might have been retrospective. Is there any way I can access either pension scheme or have I lost eight-and-a-half years of pension payments?
A Until the Pensions Act came into law in 1990, there were no legal requirements for 'preservation' of pension, according to the CEO of the Irish Association of Pension Funds (IAPF), Jerry Moriarty.
That meant that, if you left your employer before retirement, the only legal right you had was to take a refund of any money you had paid into the pension scheme.
The Pensions Act changed that so that once you had been in a scheme for five years you could keep your pension in the scheme and have the benefit of your and your employer's payments. That was later changed to just needing two years' service.
Unfortunately, those changes weren't retrospective so won't help your case. However, those were the legal requirements, Mr Moriarty said. Some employers would have always allowed you keep the benefits you had built up in the scheme.
While those employers would have been in the minority, it may be worth checking with your companies.
Q I sent in a number of out-patient receipts to my health insurer expecting to get a reasonable refund. I am on a very expensive plan costing nearly €1,733 per annum and I rarely claim. I was shocked to learn that I'm not due any refund at all as I did not exceed the policy excess. Can this be correct?
A Unfortunately, this is correct, according to Dermot Goode of TotalHealthCover.ie. Many health insurance plans offer hospital cover only, which means they really only benefit you when you are actually admitted to the hospital.
All out-patient claims on these plans are subject to limits on what can be included in the claim and then you have to exceed the policy excess, which means that most people may not be entitled to any refund. Mr Goode recommends you check out a quality corporate plan which gives guaranteed refunds on out-patient expenses, usually in the region of 50pc with no excess to exceed first. If in doubt as to the best corporate plan to suit your needs, seek advice from a qualified adviser.
If your sons pay less than market value for your property, the difference between the current value and what they pay will be subject to Capital Acquisitions Tax.
All out-patient claims on health insurance plans are subject to limits on what can be included in the claim and then you have to exceed the policy excess.