Gift Tax on Mortgage

joewicklow

I bought a house in 2003 on my own with my own mortgage. The current mortgage balance is 210k. My girlfriend moved in with me in 2003 and since then has been paying rent each month.
My problem is that we have decided to extend the house and we are going in on the new mortgage together. Our solicitor has said that since I am the only person currently on the title deeds that my gf will have to pay almost €50,000 in gift tax as essentially I am giving her half the house, (currently valued at €450k). Please tell me there is away out of this. We have discussed the marriage option but thats not for now and time is not on our side.

knighted_1

easy option for you is not to give her an equal share give her a 20 per cent stake and no gift tax (which i never heard of in this way b4)

what happens if u split up in a year she gets half ur house for free?

loyatemu

gift tax, inheritance tax, capital gains tax - all essentially the same thing (tax on money received without working for it) and all taxed at 20%.

With inheritance tax you can't be taxed on inheriting a property if you've lived there for (I think) 3 years. Possibly something similar exists for gift tax.

Why not keep the existing mortgage and take out an additional loan for the extension? There may be some way around this - maybe you should talk to an accountant.

BOHSBOHS

she will be exempt from the gift tax if u give her half the house provided
a/ she has lived there for 3 years prior to the transfer
b/ lives there for 6 years after the transfer
c/ has no other interests in property

also consider
1. capital gains tax for u on half the house (part disposal ) if its worth more now than when u bought it which i will guess it is

2. stamp duty for her on the transfer of her half :
0% if FTB , 0k
4% if not(based on half of 450k) => ~18k duty

so is your girlfriend a first time buyer?
and if not has she any current property interests ??

patrickolee

Couldn't you just marry her?

D'Peoples Voice

patrickolee wrote:

Couldn't you just marry her?

I'd rather pay 40% CGT:D

Seriously though could you rent out a room to her,
she can claim rent relief etc:)
I heard this was common where people were buying houses under the Affordable housing scheme, where the joint income would be above the threshold, so only one applies to buy the house, gets the house off the council and rents out a room to his partner.

Jo King

You can sell a share of the house to your girlfriend. Provided you sell at market value there is no question of a gift. Since it is an interest in your principal private residence there should be no capital gains tax payable.

antoinolachtnai

If you're not going to marry her right away, you probably don''t want to be gifting her a significant proportion of the house either.

The solicitor seems to be assuming that she will necessarily own half the house once her name is on the deeds. This need not be the case. She could own 20 or 10 or 5 percent of it. You could give her some credit for the rent she's been paying (corpo does it, I'd say you'd get away with it to, up to a certain amount).

a.