Selling my share of a house - how to process the money

tbh

Hi Guys - apologies if this is the wrong forum or if I'm asking inappropriate questions.

I bought a house with my sister 7 years ago, and we both lived in it till last year. Initially it was just me and my sis living there, then my g/f moved in, and my sisters boyfriend moved in. Last year, my g/f bought a house, so I moved in there with her - I'm not on the new deeds of the house or anything, and the mortgage is solely in my g/fs name.

Anyway, this year, myself and my sister decided that she would buy out my share of the house. We got the house valued, subtracted the outstanding mortgage and decided that she would pay me half the remainder.

This has all been done amicably - very amicably actually - and she should have the money from the bank tomorrow.

My questions are:

1. Do I have a tax liability on this? Someone said that because it was my home, I don't, but that sounds too good to be true to me..

2. What do I do with the money? It's a substantial amount, will I just get a cheque from her bank that I can lodge into my account, or do I need to prove where I got it or something?

any advice appreciated, thanks.

RobY

Hi,

I am in a similar position, been thinking about buying out my brother's share in the property we both own.

From informal talks with my Solicitor, I believe there are 3 things you need to consider: Capital Acquisitions Tax (Gift Tax), Capital Gains Tax and Stamp Duty.

Capital Acquisitions:

Essentially, you have gifted your sister 1/2 of a house in return for 1/2 of the excess value over and above the outstanding mortgage. As a result, you have essentially gifted her the difference e.g. house worth 400k, outstanding mortgage 300k, you gave her a 200k share in return for 50k i.e. a gift of 150k.

If you go to www.citizensinformation.ie and search for Capital Acquisitions Tax, you will see that there are limits to the amounts siblings can give each other tax free. You may be lucky and be inside those limits but a return still needs to be made to the Revenue Commisioners.

Capital Gains:

As you are no longer living there and are disposing of an asset which has appreciated in value (even if you are disposing of it as a gift), there may be Capital Gains tax implications. A search on citizensinformation might shed more light.

Stamp Duty:

Presumably, as first time buyers (an assumption), yourself and your sister didn't pay stamp duty. However, now you are disposing of your property to her, by deed of transfer or similar, to be fully legal and presumably amending the mortgage deed to remove your name (and liability for the mortgage), so there may be stamp duty implications. Citizeninformation may shed some light.

In terms of the cheque or whatever that you receive, you need to be conscious of anti money laundering procedures that the banks have and they may make Revenue aware of such a large lodgement so you would need to be sure you have addressed all of your obligations under tax law.

I know this seems like a lot to consider - I was quite shocked when I had the discussion with my solicitor (and I am only vaguely considering the idea of buying out my brother in the next few years).

Probably your best bet would be to talk to a solicitor and read the info on www.citizensinformation.ie

RobY

tbh

thanks a lot Roby, I'll get onto citizens advice. Much appreciated.

tbh

update, I phone the citizens advice place, who put me through to revenue. Revenue say that neither of us have a tax liability because we both lived there.

happy days

Sherifu

That's sweet tbh. Congrats.

RobY

Cool. That might accelerate my decision to buy my brother out!!!

tbh wrote: »

update, I phone the citizens advice place, who put me through to revenue. Revenue say that neither of us have a tax liability because we both lived there.

happy days