Mortage question- it's a fun one!!!!

Gillo

Looking for a bit of advice.

Myself and girlfriend are buying a house. She currently owns a house with her sister which they bought about 3 years ago. They bought live there and have been planning on selling the house and going their seperate way's (very ammicably- it was always the pla to sell it in a few years).

We have approached her sister regarding us buying the house, or effectively buying her out. We based the offer on
Current Value minus (Outstanding mortage & solicitors fees) and then devided by two (they each have an equal share in the house).

Now since I've never bought a house before, can I claim some back the stamp duty.

Also what are our options for financeing the purchase, I can see two options
1; keep the current mortage and pass it into our name's then borrow what we need to pay her
2; take out a brand new mortage to pay off the current one and what we have to pay her sister

Anyone got any other idea's

Any advice in general appreciated.

silverside

i'm not an expert but
from the stamp duty point of view you are buying half the house from the sister (forget about the gf for now) so should pay stamp duty on half the house (at a first time buyer rate for second hand houses), since the gf is keeping her share she shouldn't pay any stamp duty.

from the mortgage point of view as you say, one way is for the sister to pay off her half of mortgage and transfer the remaining half into your gf's name. then you could take out a separate mortgage for your half.
it might be cleaner to just have one mortgage though. not really sure how this works.
what you want to avoid is having to pay stamp duty on the whole value of the house.

once you both own half the house each, you might want to convert to having the house jointly owned (instead of half and half) , not sure if there is a gift tax liability on this (definitely isnt if you're married).

this sounds slightly messy so find a good solicitor. do you have any relations in the legal profession?

Idleater

Silverside, I don't think that is correct.

the government dont care what % of the house one party is buying. They just get stamp duty on the Sale value.

What the OP is essentially doing is 2 people selling the house on the open market to 2 other people.

The OP loses their FTB status most likely because both buyers must be FTB's to qualify as far as I know.

OP, talk to a solicitor. You will have to anyway. And as a piece of advice, probably a different (independant) solicitor to the one used by your buying partner.

L.

stepbar

tYour best bet would be for your gf to buy out the sister and offer a premium. If there is equity in the house the bank should have no prob refinancing. The bank dont really care as long as you can prove there is capability for repayment. So therefore the mortgage advisor (in support of the application) would put down that bf earns" x" eur and can contribute "x" eur towards mortgage. gf "x" eur & bf "x" eur = "y" pm. As long as you can meet "y" bank dont care if you have to beg steal or borrow, as long as they are 100% sure you can meet "y" eur you are fine.

silverside

nereid, i'm not sure , but what i have said makes sense to me.

if the OP and his gf were not a couple, and his gf's sister just wanted to sell on her half the house to Joe Bloggs, surely Joe Bloggs would only pay half the value of the house, and the stamp duty would be based on this.

Now i would think since the OP is not married, they are treated in the eyes of the law like 2 individuals. so the OP is treated just like Joe Bloggs.

One niggle is that the OP and gf end up owning half the house each, instead of one house between them, but this can be remedied later if necessary.

It is an interesting one and would be interested in what the definitive answer is.

Idleater

silverside wrote:

nereid, i'm not sure , but what i have said makes sense to me.

cough

and cough and cough

It does make sense, but that would leave the government with very little to no stamp duty income. Basically because by your logic, a property worth €3 million could be bought by 10 "people" (each paying €300k) and no stamp duty being due.

for example (from numerous other relavant questions answered in the links above):

revenue wrote:

What is the position where a person, being a first time buyer, purchases a house using the proceeds of the sale of a house owned by their spouse or partner who is not a first time buyer?

Where a person who is a first time buyer uses the proceeds of the sale of the house they previously occupied which was owned solely by their spouse or partner to buy a house solely in their own name, first time buyer relief would not be available as the spouse or partner (not being a first time buyer) would be providing the purchase monies for the house.

L.

Chunkychops

Hi Gillo

The best option is for you and your gf to take out a new mortgage and use the proceeds of this new mortgage to pay off the old one. With regard to stamp duty, there will be no liability (as long as the price is not over €317,500) as you are a FTB abd your gf is not selling her share.

You should go to a mortagge broker to get detailed advice and get the finance sorted to makesure you can get it. Try www.a2zmortgages.ie they helped me out recently and they are very friendly and explain everything in plain english.

Best of luck with everything