I am very confused about my mortgage. I am a customer of Ulster Bank and on the one hand I was told not to do anything in terms of change although I have to move my checking account and overdraft too but my mortgage rate is 3.1 % which was on a fixed rate I think, but I don’t know if that’s still the case.
I have about €135,000 left with 9 years to go. If I had to move him myself, is it worth it, or will the bank he is moving give me a better deal? I am particularly anxious as I see interest rates rising. My brother-in-law says he is switching to AIB as they have better “green” rates – what should I do?
Ulster Bank sells its successful untracked mortgage portfolio to Permanent TSB, so your mortgage will most likely be assigned to PTSB who will become your mortgage lender. So unlike your checking account which you must actively change because it will close, your mortgage will remain in place.
Your decision is whether to stay with Ulster Bank or seek to switch to another lender if it makes financial sense. It is important to understand if your current rate is fixed or variable. 3.1pc is a high rate relative to the market and even Ulster Bank’s current fixed rates are lower than that.
If you are on a variable rate you have the option of committing to Ulster Bank and assuming your loan value is less than 60% you can, for example, get a fixed rate of 2.35% on 5 years or a 7-year rate of 2.8pc. If currently fixed, you should check if there would be a break penalty for breaking your fixed contract and locking in one of those lower fixed rates or moving to another lender.
If you decide to switch, there are excellent tariffs on the market, including the green tariffs you mention above, which are available if your building’s energy rating is B3 or higher and start from 1.9 pc.
Rates are expected to rise in the near future, so now is the time to explore all options.
My dad owns a small commercial space with an adjoining flat in a Midlands market town, which is worth around £225,000 at the latest valuation.
He needs a little work and is hesitant to do it given the cost – he won’t get a loan at his age. The office is rented to a long-term tenant, but the apartment is vacant due to its condition.
My dad is now 78 and as his only son he has to come to see me every time he dies, but his question (through me) is if it’s more tax efficient or if Does it make a difference if he gives it now or wants it from me? If it is passed on to me, could I invest in it as an owner now?
Barry Prendiville of Nolan & Partners advises you, transferring the property to you now from your father (a lifetime transfer) may trigger capital gains tax (CGT) for your father and potentially a tax on the acquisition of capital (CAT) and stamp duty. for you.
If the property is transferred on the death of your father, there will only be the CAT to take into account because there will be no CGT or stamp duty.
If you want to calculate your father’s potential CGT liability on a lifetime transfer of the property to you, it will be necessary to establish a cost base for the property. Depending on the history of the property, this may not be a completely straightforward exercise.
This also assumes that your father has no CGT losses carried forward from previous asset disposals. As the transfer is made between related parties, your father will be deemed to have transferred the property to you at its market value.
A CAT liability may arise upon the transfer of ownership to you. This liability will arise regardless of the property transferred now or upon death and is generally based on the market value of the property at the date of transfer.
A CAT liability will only arise if you have already received gifts/inheritances from your parents in excess of your Group A lifetime tax exemption threshold (currently €335,000). If this is the case, and ignoring the annual small gift exemption, the CAT liability will be calculated at 33% of the market value of the property.
Barry notes that any CGT paid by your father arising from the transfer of ownership to you is available to be used as credit against your CAT liability arising from the same transaction. The credit will be capped at CGT’s actual liability arising from the transaction.
Finally, a stamp duty obligation will arise upon the lifetime transfer of ownership to you. It will be important to establish the market value of residential premises as opposed to commercial premises, stamp duty of 1pc will be payable on the residential part of the building.
Martina Hennessy is Managing Director of doddl.ie
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