House Deposit - Partner

diazbro209

Hi Everyone

Any advice or guidance on the below from anyone who has done something similar or knows someone in a similar situation would be greatly appreciated.

I currently live with my partner (1 bedroom apartment) which I have owned for 5 years. We want to buy a bigger place come early next year. We will each have 25k saved by the time we go for our application. I had to give my parents every euro I had last year due do a bad situation which meant I didn't pay my mortgage for 3 months and it went into arrears. Its been fully cleared for over a year and I have never missed a payment apart from that and haven't since.

If we cannot get a mortgage together due to that (I hope that is not the case but I am preparing for if so) my girlfriend will apply for one on her own. I will then gift what remainder of the deposit she needs above the 25k she will have saved. I know we have to pay CAT on it but there's conflicting info online - is it every euro above 3k is 30% or does the below exemption apply?

It says on Citizens info:

C €16,250 Any relationship not in Group A or B

We will pay the tax / whatever we have to if it comes to it I am just trying to work out what I can actually give her tax free? Can I also give my sister a similar amount then she can give that to my partner as that would be from a different individual?

Thank you

SureYWouldntYa

Your girlfriend is essentially a stranger, so she will be considered part of Group C as you have pointed out. This is a lifetime tax free threshold from all people who are considered part of Group C, so as long as your girlfriend hasn't received a gift from someone else in this group before (cousin, friend etc.)

There is an annual allowance of €3k separate to this - meaning the total you can give your gf tomorrow tax free is €19,250

Every euro above this will be taxed at 33%

You can give €3k each year so you could give €3k now and then €19,250 in January as you get closer to applying

If you were to give your sister money to give to your girlfriend it would not be tax free as your sister would also form part of group C. Even if you identify someone in group A or B for her there it would be considered a gift from you in any event and quite an obvious one (ie large funds transferred from you and then x days later to your gf)

You could loan your girlfriend any excess funds required tax free - if she does not pay you any interest then the interest foregone would also be considered a gift and subject to CAT, although this may be minimal amounts. You would be wise to do up a contract stipulating the repayment terms and sticking to this if possible, although i'm not sure of the implications of 'writing off' the loan should you get married in future, someone else may have some guidance on that

Mrs OBumble

How long have you lived together? A bank may treat you as as equivalent to a married couple, due to what would happen if you split up.

Lenar3556

https://www.boards.ie/discussion/2058364324/house-deposit-partner

Firstly, you both need to get independent legal advice surrounding the joint purchase of this property. Whist your relationship may be very strong as things stand, situations can change and the purchase needs to be structured in such a way that best represents both of your interests.

The tax question you have posed is unlikely to arise. There isn’t a gift to your girlfriend, this is money which you are investing in a house, for which you both will have an interest.

The missed payments situation may not be very serious. But more needs to be understood about that. Did you notify the lender that you would be unable to pay for a period and agree this with them? The circumstances why you had such a pressing need to divert funds to your parents will also be of interest to the bank.

diazbro209

Thanks everyone much appreciated.

@sureYWouldntYa I didn't think about the 3k on top of the exemption thats very helpful thank you.

My current mortage on my property which I bought about 5 years ago, is with AIB and there is about 140/150K equity in it which will be sold, so i'm hoping AIB see us as no issues for a joint mortage application which is our preference and makes this issue a non-starter, but just trying to do my DD on what would happen if they say no and my gf needs to get one on her own.

My parents were renting a property which they had been in for 5/6 years, but had to leave quickly and at their age - Dad was 66 and my mam 60 at the time they could only get a 20-year mortgage and I had to give them the deposit which I did for a house, which was my entire savings at the time and my salary aside from what I needed to live of for 3 months. I never explained this to the bank at the time only after the fact.

My girlfriend and I have been living together since November when she moved to Dublin last year but we have been together for 4 years in total.

Peregrinus

Couple of thoughts.

First, to get it out of the way: you're of course aware that your CAT issues with giving money to your partner would go away I if the two of you married. I'm very far from suggesting that anyone should marry anyone else for tax reasons but, well, there it is.

Secondly, if it turns out that the bank won't lend money to you, your partner won't be able to get a loan on her her own secured by a mortgage on a property owned by the two of you. So in this scenario I think the property is going to have to be bought in the name of your partner alone. This raises all kinds of issues, not least that you will be contributing a fair chunk of the cost of buying a property of which she will be the sole registered owner. Is this a very generous gift to your partner, or do you (and she) see you acquiring an interest in the property in return for the contribution you make to buying it? I'm guessing the latter.

So, if it looks like you have to stay off the mortgage and the title, the two of you need to sit down with a solicitor early in the process and work out what can be done to document your interest in the property in a way that won't spook the bank but that will protect your interst in the event that she runs into financial strife or the two of you break up or, God forbid, she dies. What you do in this regard could, as it happens, solve your CAT problems, but it could potentially solve a lot of even nastier problems.

diazbro209

Thanks Peregrinus

We agreed to hold of getting married until 2026 (proposal next year) as we wanted to save aggressively this year in order to get a house deposit saved, then I can spend a few months saving for a ring at the start of next year. With regard to my current property, it isnt a factor in the new property as we don't need to sell it to fund even though we are selling, but as it is with AIB we are going to tell them it is being sold /will already be on the market when we go to them for our application.

AIB is probably our best shot at a successful joint application so if they say no my gf will just go to other lenders (prob through a broker so any advice or tips on that would be appreciated)

With regard to the legal bit, completley agree, I did the same thing with my Mam and Dad. I was giving them the deposit but the property would be mine when the both pass which they updated their will etc to reflect a few months after purchasing. Will be doing the same thing with my girlfriend on our new home if it comes to having to do a solo application for her. Again I hope none of this is an issue as we are both good earners and have no major financial committments atm and our bank statements (both with AIB) reflect that.

Kalimah

Sorry to be the bearer of bad new but I can't see you getting a joint mortgage from the bank for a new property. The fact that you didn't pay your mortgage for three months is a huge red flag. If you had approached them and asked for a break in payments and explained it all, it might have gone in your favour. As it is the bank will see you as flaky and unreliable.

Years ago we were on a really really tight budget but the mortgage was never unpaid. It was mortgage first, bills second and you lived on the change. No room for anything else.