Buying with girlfriend

tevion

I am considering buying a house with my girlfriend in the near future.
I already have a mortgage in my name.
If I buy with my girlfriend, can she avail of the first time buyer benefits?
Can the house be put solely in her name so she can avail of whatever benefits there are?
Is it possible to get a joint mortgage, and put the house in her name, then get a contract drawn up to state we both own it?
Is there any advantage to this?
Whats the best solution without me having to sell my existing place?

athtrasna

It's tax evasion by another name. While we all want to avoid spending money we don't have to, this is not one of the smarter options. Putting a property solely into your girlfriend's name in order to avoid stamp duty or claim increased tax relief is not advisable.

Buying with a person you are not married to can be tricky as the potential for loss is massive, you need to detail fairly precisely how much you are both putting in, who is responsible for what costs, furnishings, maintenance etc...this is all for protection just in case anything goes wrong.

The_Conductor

If either party already own property in Ireland or abroad, you are not entitled to claim First Time Buyer status.

Your girlfriend cannot exercise her FTB rights if she purchases property with you- and by purchasing property with you, extinguishes those rights.

Your girlfriend cannot purchase the property solely in her name, unless she is the sole and legal owner of the property. Solicitors are legally obliged to inform the Revenue Commissioners of any attempts to subvert this (see the 2006 Finance Bill).

Is it possible to get a joint mortgage, put the house in her name and then draw up a contract detailing joint ownership. No, its not. You need to be a beneficial owner of the property in order to secure a mortgage on it. If your name is not on the title deeds, there is not a Financial Institution in the country who will offer you a mortgage, period.

Is there an advantage to doing this? No- even if you got away with it, the TRS relief on the mortgage would be half what it otherwise would be, and wholly withdrawn when Revenue got wind of a fraudulent FTB claim.

What is the best solution without you selling your current place- to be honest- its highly unlikely that you will actually get a second mortgage without selling your current place. When did you get approval in principle? Rules have been tightened up considerably in the past few weeks.

Why do you want to purchase a property with your girlfriend at the moment? Have you looked into what the tax implications are- both the transaction, but also the manner in which any rental income on the pre-existing property will be treated? Can you afford to carry the mortgage on both properties for a few months if the property is vacant (increasingly likely given the acceleration in availability of rental property)?

If your girlfriend is insistent on purchasing at present- a far better solution might be to legally loan her half the money with a defined repayment schedule, and register the loan as a legal mortgage on the property that she is purchasing. She gets all the benefits of being a First Time Buyer- and while you are not purchasing the property with her, you have a legal mortgage on the property securing the loan you are giving her towards buying the place. I'm aware of a few people using mechanisms such as this (for a number of different reasons) over the past few years.

Note: this is assuming you are in a position to borrow the cash to finance the loan to her in the first instance.

If you structure her repayments to you for the loan appropriately, its possible there may be zero tax implications (but it will necessitate an annual tax return).

Ps- there is a big difference between tax avoidance and tax evasion.

Who said romance was dead eh?!


I'm not sure if it helps but my friend bought a house and got the mortgage with his dad, but he got the first time buyers exemption from stamp duty, and it was legal - may be different with parents though?

The other option is to buy a new property as there would be no stamp duty for owner occupiers. I'm not sure if this is effected by the fact that you have a second property though....

astrofool

The father was likely a guarantor, with no legal right to the property.

The_Conductor

astrofool wrote: »

The father was likely a guarantor, with no legal right to the property.

Most probably.

smccarrick

smccarrick wrote: »

Most probably.

very possibly......

Iago

smccarrick wrote: »

If either party already own property in Ireland or abroad, you are not entitled to claim First Time Buyer status.

Is it possible to get a joint mortgage, put the house in her name and then draw up a contract detailing joint ownership. No, its not. You need to be a beneficial owner of the property in order to secure a mortgage on it. If your name is not on the title deeds, there is not a Financial Institution in the country who will offer you a mortgage, period.

This isn't quite true.


My wife bought a house in her name. We subsequently started dating and got married, I moved in and we discussed various options. Eventually we decided to re-mortgage the house under both our names.

However my wife is the sole owner of the home, my name is not on the title deeds and I have no right to the property in the event of us splitting up. I had to sign a legal disclaimer acknowledging that I had received independant legal advice and understood the commitment I was making on the mortgage with no right to the home.

I still have my FTB status and if/when we move next I will be able to buy a property in my name and use my FTB status to avoid paying stamp duty. My wife will have to sign a similar disclaimer regarding her rights to that property before our mortgage application is accepted.

The_Conductor

Iago wrote: »

This isn't quite true.


My wife bought a house in her name. We subsequently started dating and got married, I moved in and we discussed various options. Eventually we decided to re-mortgage the house under both our names.

However my wife is the sole owner of the home, my name is not on the title deeds and I have no right to the property in the event of us splitting up. I had to sign a legal disclaimer acknowledging that I had received independant legal advice and understood the commitment I was making on the mortgage with no right to the home.

I still have my FTB status and if/when we move next I will be able to buy a property in my name and use my FTB status to avoid paying stamp duty. My wife will have to sign a similar disclaimer regarding her rights to that property before our mortgage application is accepted.

This is tax evasion- and is specifically not allowed. If the Revenue Commissioners hear about it- not only will you have to repay the Stamp Duty- but you may also have penalties to pay also. Check it out with a competent tax advisor- I did......:( I had the same idea as you had.......

ixoy

smccarrick wrote: »

This is tax evasion- and is specifically not allowed. If the Revenue Commissioners hear about it- not only will you have to repay the Stamp Duty- but you may also have penalties to pay also. Check it out with a competent tax advisor- I did......:( I had the same idea as you had.......

Really? Interesting, I thought that would have been allowed as the poster is relinquishing all rights to the property. Is he not in effect his wife's tenant or does it not work like that?

The_Conductor

It doesn't work like that.
A family member can no longer be considered a "tenant" for tax purposes (it changed about 4 years ago- primarily as a result of abuse of the "rent-a-room" scheme).

Re: the example given- Iago's wife is the legal owner of the property in which they are both now residing. Fine.

Stamp duty relief for first-time buyers is intended to benefit only genuine first-time buyers. For Iago to meet the criteria to qualify for the relief, the entirety of the purchase monies must be provided by him from his own means.

If Iago's wife provides any part of the purchase monies by way of a gift or a loan, Iago will be precluded from claiming first-time buyer relief. Where Iago's wife is not a party to the deed of purchase and intends to, or does occupy the house with Iago as a principal place of residence, or there is an understanding or agreement that the house, or an interest in the house can not be transferred to his wife after the purchase- First Time Buyer Relief can apply. However, Iago's wife's only role in the transaction would be to act as a guarantor on his loan, in order for him to be treated as a first time buyer. Iago and his wife must both live in the Iago's new house and not rent it out for two years and his wife must not contribute financially in any way whatsoever towards the purchase.

Its not simply the case of signing a legal document acknowledging that the other party in the transaction (in this case Iago's wife) has no interest in the property- if it can be proven that she contributed in any manner toward financing the purchase- which includes going joint on the mortgage- the deal is off from the Revenue Commissioner's perspective. She can act as guarantor on the mortgage- which is a different matter- but cannot be seen to contribute financially towards the purchase.........

Check it out.........

IanCurtis

tevion wrote: »

I am considering buying a house with my girlfriend in the near future.
I already have a mortgage in my name.
If I buy with my girlfriend, can she avail of the first time buyer benefits?
Can the house be put solely in her name so she can avail of whatever benefits there are?
Is it possible to get a joint mortgage, and put the house in her name, then get a contract drawn up to state we both own it?
Is there any advantage to this?
Whats the best solution without me having to sell my existing place?

This has got to be a wind-up? They say love is blind, but incredibly stupid???

God be with the youth of Ireland, they haven't a clue...stick with Leona Lewis and leave tax law to the adults....dear oh dear

Iago

smccarrick wrote: »

This is tax evasion- and is specifically not allowed. If the Revenue Commissioners hear about it- not only will you have to repay the Stamp Duty- but you may also have penalties to pay also. Check it out with a competent tax advisor- I did......:( I had the same idea as you had.......

Well I'll admit that I'm neither a legal or tax expert, so we asked our solicitor at the time.

We went in to switch the mortgage and deeds into both our names, he asked us why we were doing that and proposed this solution. As far as he is concerned as long as I relinquish any rights to the property and I have never been named on the deeds of a property as a home owner I'm still a FTB as far as the law and the revenue are concerned.

If we decide to move I'll get a mortgage in my name, and put the house in my name. At some point after that, we re-mortgage so that it's in both our names (or don't as the case may be) but the home remains in my name, and therefore I can avail of FTB even though my wife has previously been a home owner.

Our solicitor was very adamant that this was both legal and sensible tbh. If it turns out that he was wrong, I'll be a little pi$$ed.

The_Conductor

Iago wrote: »

Our solicitor was very adamant that this was both legal and sensible tbh. If it turns out that he was wrong, I'll be a little pi$$ed.

My solicitor suggested something very similar to me. My accountant, however, told me a very different story......

John Mason

I bought a house in my name, and my partner at the time moved in with me. Obviously, he was helping with the mortgage.

It all went peared shaped, after a year, he tried to take me to court for half the house because apparently, he was entitled to some of the house because he had moved in with me on the first day of my occupancy and there was no tenancy lease in place or something like that, i was a long time ago

You need to get serious legal advice and i would not advise putting your gf on the mortgage or the deeds and make sure you get a pre-nup drawn up, its not legally binding but it show a clearly idea of what you both agreed to, so there is no he said/she said

Iago

smccarrick wrote: »

My solicitor suggested something very similar to me. My accountant, however, told me a very different story......

Having looked at the revenue site I can see the point you're making. What it will come down to is how you manage the new home, i.e. there are legal ways and mechanisms available to work-around this situation.

As long as you can get approved for the full value of the home, and the only money that is spent on the mortgage is yours, then you can do this. That means you need to be able to fund the mortgage from my salary with your partners salary being used for bills and savings.

I will still be looking to do this if we move.

kmick

The OP is not married but in the case where a couple is married one or other of the couple cant relinquish their right to half the marital home. They can sign a document that says they do but it has as much legal clout as a pre-nup.