Can i split the buying price in half and get FTB on 1 half and stamp duty on the othr

dwayneburke

Hi

In a situation whereby myself and my girlfriend are buying MY PARENTS home.

I already have property which i am owner occupier, and it is currently up for sale. My parents house is going for circa €375000. I know that if both patries were to appear on the deeds i would not get the Family/relation benefit of 50% off the stamp duty i.e. from 6% to 3%. I have a few options open to me

I buy the house off my parents myself and only my name appears on the deeds (which my partner is not too happy about as she doesnt have security understandably enough)

We both buy the house together and take the 6% hit

The accountant queried if it is possible to split the cost of the house in half i.e. my girlfirend buy her share for €187500 and she would be regarded as a FTB paying no tax. And on my €187500 i would pay 1.5% tax or 3% whatever the case maybe (DONT KNOW IF THIS IS POSSIBLE BUT CHECKING IT OUT)

I apply for the mortgage along with my father leaving her out of it and i get the house for 3%. I would also create a (separate legal agreement) that she would at least be entitled to whatever she put into the house if the reltionship turned sour. I.E. i would be liable and not the house.


Any ideas anyone?

Cheers

antoinolachtnai

Interesting stuff, certainly. It's really up to the revenue what they would do. I'm sure they must come across this where a number of people buy a house together.

You could do the thing where your partner would be entitled to something if things went sour. This could work, if you only allowed her what she put into it and no more. If you did any more, this would be giving your partner an interest in the property. This could have a tax implication (capital acquisition) unless she pays for it up-front. If she does pay for it, there could be tax implications too, as you will have a gain.

Another issue: your partner will be expecting to participate in the growth in the value of the property over time. If you only give back to her what she put in, then she won't benefit from this. (although obviously you would pay her some determined level of interest).

Equally, if the property were to go down in value (it does sometimes happen) you are going to be left taking the hit for it.

Another problem with this arrangement is that it puts the burden on you to be liquid. By 'liquid' I mean you'd be under pressure to come up with cash if anything went wrong. In reality, it might be difficult for you to raise the money quickly. (Property is a good investment, but don't expect it always to be as easy to sell as it is at the moment.)

All in all, that option sounds complicated.

There are at least two ways of buying a house together. One is tenancy in common, the other is joint tenancy. My feeling is that if you opt for tenancy in common rather than joint tenancy, the Revenue might allow you to do what the accountant proposes. But I don't really know.

Be sure that you talk this over with your solicitor as well as your accountant. It's very important to understand the different ways of owning property in partnership.

One thing I would say is to avoid setting up any sort of structure that is complex or in any way ambiguous. It will be too complicated. The difference in tax will be about 9 grand, and you could easily eat through a few thousand in solicitors fees just setting the whole thing up and you could spend even more trying to resolve any dispute that might arise later. Sometimes it's better to just pay the Man his money.

Victor

Assumming it's a conventional residence, where you can't buy the gate lodge or half acre side garden separately.

You can't split a property to evade stamp duty. This has always been the situation but they announced in the budget that there was going to be specific measures taken against people attempting it.

dwayneburke wrote:

The accountant queried if it is possible to split the cost of the house in half i.e. my girlfirend buy her share for €187500 and she would be regarded as a FTB paying no tax. And on my €187500 i would pay 1.5% tax or 3% whatever the case maybe

The accountant doesn't seem to be up to speed on the above. Its not a great idea gettign into a contrived sitaution where you end up spending more on fees and the Revenue are going to come chasing you later. You accountant should be giving you specific advice on this and you should each have your own solicitor (seller, you, other half). As I understand it engaged couples have some but she'd be a fool to pay money and not have her name on it.

You could trying asking Daddy to sell it to you for less than the stamp duty threshold (€317,500?)

LoneGunM@n

Victor wrote:

You could trying asking Daddy to sell it to you for less than the stamp duty threshold (€317,500?)

The problem with this Victor is that the Revenue Commissioners may investigate the sale as it is a family transaction so as to ensure that it is an arms length transaction ... doubtful, but if they do, they may calculate the stamp duty on the actual market value of the property!!

antoinolachtnai

The solicitor may be asked to stand over the transaction and the valuation, which could get messy.

To be fair Victor, the type of split this guy is talking about might be a bit more palatable to the revenue commissioners than the type where you try to get the transaction through on a lower rate. You'd really need to ring them up and ask what they say. I have heard of the revenue trying to do the decent thing as regards stamp and FTBs in borderline cases.

nlgbbbblth

there is no problem with you taking a mortgage in joint names with just one party's name on the deeds

antoinolachtnai

The only problem is that the person who was on the mortage but not on the deeds would have to be a little bit insane (or else a loving parent).

davidoco

nlgbbbblth wrote:

there is no problem with you taking a mortgage in joint names with just one party's name on the deeds

This should suit perfectly because the dad will have got his money ie the mortgage that was raised, and would have no rights on the property, he is just lending his weight to get the mortgage.

Then six months down the road you put the house in joint names with your partner. Of course the bank will want to put her on the mortgage in lieu of your father. Say 2,000 in fees compared to paying out 11,000 extra in Stamp Duty. What could you get for 9,000 euro, in fact how much do you have to earn to have 9,000 euro.

nlgbbbblth

antoinolachtnai wrote:

The only problem is that the person who was on the mortage but not on the deeds would have to be a little bit insane (or else a loving parent).

is sometimes done by husband and wife for investment properties - usually when one party is already registered for VAT (self-employed) so they leave their name off the deeds