Husband's Contribution for Buying an Apartment

Info_Seeker

Hi Folks,

My spouse is buying a small apartment on cash. The proceeds are from her savings and I am contributing some amount. She will rent the apartment and it will be her only income source from 2024 on wards.

We have submitted and will submit our tax returns as joint till end of 2023. From 2024 we will submit returns separately.

Most of the apartment payment is from our joint accounts. Some amount is in my individual account and will be transferred to solicitor from my account. Can the amount from my individual account to purchase apartment (the apartment will be in her name) create any issue with solicitor, revenue, etc.?

Thanks!

nompere

https://www.boards.ie/discussion/2058319164/husbands-contribution-for-buying-an-apartment

Why would you file separate returns? Your total tax liability when jointly assessed can never be higher than if you file separately, but separate filing can produce a higher total liability.

Seve OB

Why the hell are you going separate assessment?

Info_Seeker

https://www.boards.ie/discussion/comment/121270809#Comment_121270809

I will be on higher tax bracket. She (with her rental income only) will be on lower tax bracket.

ButtersSuki

Ask yourself/your wife if you really want to become landlords in the current climate - you can read some of the many nightmare stories on the accommodation thread. There’s a lot of reasons private landlords are leaving the market at the moment.

If you still do, then talk to an accountant about your tax affairs.

Info_Seeker

https://www.boards.ie/discussion/comment/121270878#Comment_121270878

Looking for a relevant response...

ButtersSuki

https://www.boards.ie/discussion/comment/121270911#Comment_121270911

It’s completely and entirely relevant. You sound like you’re going into this rather “unprepared”, to put it mildly.

Have you/your wife any experience of being a landlord? What if a tenant decides not to pay you any rent and overholds? What about expenses like repairs, property tax, breakages, replacements etc. - have you budgeted for these? Have you ever had to deal with the RTB (who are almost entirely pro-tenant and anti-landlord)?

As per my original post, why do you think private landlords are exiting the market in droves? If you do nothing else today read the nightmare stories in the Accommodation thread before you proceed - it might soften your cough a little.

You will still ultimately be jointly assessed btw as long as you’re married.

Seve OB

You will still ultimately be jointly assessed btw as long as you’re married.

that is not true. You can apply for separate assessment as a married couple

Seve OB

https://www.boards.ie/discussion/comment/121270834#Comment_121270834

You clearly don’t understand the tax system. It’s nearly never ever more beneficial to be separately assessed. Based on what you have said, you should be staying jointly assessed, unless you just want to give the government some extra tax

ButtersSuki

https://www.boards.ie/discussion/comment/121270939#Comment_121270939

Sorry, I worded that rather poorly. Yes, you can apply for it but it’s more beneficial to be jointly assessed.

Info_Seeker

https://www.boards.ie/discussion/comment/121270943#Comment_121270943

Got it @Seve OB

Appreciate your response on the original question as well: "Most of the apartment payment is from our joint accounts. Some amount is in my individual account and will be transferred to solicitor from my account. Can the amount from my individual account to purchase apartment (the apartment will be in her name) create any issue with solicitor, revenue, etc.?"

Geuze

https://www.boards.ie/discussion/2058319164/husbands-contribution-for-buying-an-apartment

Spouses can transfer assets between themselves, without any implications for CAT.

Info_Seeker

https://www.boards.ie/discussion/comment/121273363#Comment_121273363

Thanks!

nhg

Separate Assessed spouses, once both spouses have filed their respective tax returns can write to Revenue requesting any unused rate band or tax credits to be transferred to the other spouse.

Xander10

https://www.boards.ie/discussion/comment/121270943#Comment_121270943

Being taxed under joint assessment or separate assessment = exact same liability for the year

Seve OB

https://www.boards.ie/discussion/comment/121300937#Comment_121300937

this is incorrect advice to give

Xander10

https://www.boards.ie/discussion/comment/121301025#Comment_121301025

Do explain? And for clarity we are, as was being discussed, comparing joint assessment with separate assessment (I've edited my post in case you were confused)

nhg

https://www.boards.ie/discussion/comment/121301025#Comment_121301025

Are you confusing Separate Treatment with Separate Assessed…..

Seve OB

deleted

Seve OB

https://www.boards.ie/discussion/comment/121301042#Comment_121301042

Simple example

wife earns 80k & husband earns 25k

separate assessment wife would pay 20% on amounts up to 40k & 40% on everything over 40k. Husband pays 20% in his amount of 25k.

so between them, they pay 20% on 65k and 40% on 40k

jointly assessed they would pay 20% on 80k and 40% on 25k

nhg

Either way they could earn €74,000.00 taxed at 20% with the balance at 40%

The maximum transferable rate band between spouses is €9000.

If one of the spouses earns less than €31,000 the rate band is restricted to match gross wage with the remaining €9,000 available to transfer to the other spouse

40,000 + 9,000 + 25,000 = €74,000

Info_Seeker

https://www.boards.ie/discussion/comment/121305194#Comment_121305194

Excellent explanation!

Xander10

https://www.boards.ie/discussion/comment/121305194#Comment_121305194

The unused rate bands are transferred at the end of the year

So my advice is still correct

From revenue

Credit.

Allocating tax credits, reliefs and rate band

Any unused tax credits, reliefs and rate bands can be transferred between each spouse or civil partner. This is the same as joint assessment

Xander10

https://www.boards.ie/discussion/comment/121307085#Comment_121307085

But incorrect

Info_Seeker

https://www.boards.ie/discussion/comment/121308081#Comment_121308081

So which one (individual or joint) is better in your opinion in terms of net benefit considering

(i) tax @20% and

(ii) credits/reliefs?

Xander10

Joint assessment is the most straightforward.

Seperate assessment the same, but depending on income levels, you might have to claim unused credits at the end of the year. This suits some people, because they like to get a refund at the end of the year.

Seperate treatment is a no no. No transfer of unused credits and allowances. Typically used by couples who might be splitting up

nhg

https://www.boards.ie/discussion/comment/121308140#Comment_121308140

Both Joint Assessment & Separate Assessment have the exact same outcome the difference is that with Joint assessment you can transfer availability rate band & tax credits between spouses during the year. The assessable spouse (the one who’s name the paperwork is addressed to) submits an income tax return for the couple.

With Separate Assessment you cannot transfer available rate band or tax credits until after the year end when both have submitted their respective income tax returns and have written to Revenue requesting the rate band and/or tax credits to be manually transferred to the other spouse.

Seve OB

My bad. Didn’t realise that you could transfer unused band/credit at the end of the year. I must have been out that day 🤣