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Capital Gains Tax - Separation and house remortgage

  • 16-08-2016 7:55pm
    #1
    ste2010
    Registered Users, Registered Users 2 Posts: 2,818 ✭✭✭


    My sister bought a house a number of years ago and split with her boyfriend at the time. They bought the home together and the property has increased in value by 20k.
    She doesn't want anything to do with the house anymore and has agreed to transfer the property soley into his name on the following conditions
    -no fees are paid by her
    -no money is given to her for the transfer (or profit)
    So long story short, her name is removed at no expense and she receives no money
    As the house value is 20k more than the mortgage and even though she will not see a penny of the 20k is she liable to declare this for capital gains purposes


Comments

  • #2
    scheister
    Registered Users, Registered Users 2 Posts: 1,312 ✭✭✭scheister


    i would see it as your sister gifting her share in the house to her ex. She will have to pay CGT on half the gain of the house since it was bought. Her ex will be liable to CAT for the value of half the house less any annual exemption and left over strangers in blood relief he may have


  • #3
    exaisle
    Registered Users, Registered Users 2 Posts: 2,676 ✭✭✭exaisle


    Firstly, you need a valuation. Secondly, the fact that the house is worth 20k more than the mortgage is irrelevant. However, if the house has, in fact risen 20k in value, then her share of that is only 10k.
    The question of whether it was her principal private residence also arises.
    Anyhow she would be entitled to deduct any improvement costs spent over the term of her ownership and she is also entitled to deduct any costs of acquisition incurred when the house was originally purchased. This includes her share of stamp duty and legal fees so it may be quite substantial.
    There's also the personal allowance of €1270. Id be surprised if there was any kind of substantial liability arising, BUT your sister should make a condition of signing her share over that her ex pays any tax liability arising on the tranfer. Fair is fair....he's getting a substantial gift.
    I don't want to sound like a broken record here, but a quick chat with an accountant would probably help.


  • #4
    Atlantic Dawn
    Registered Users, Registered Users 2 Posts: 85,539 ✭✭✭✭Atlantic Dawn
    GDY151


    She would want to see the bank first to see if she can get her name off the mortgage, bank is unlikely to do this.


  • #5
    exaisle
    Registered Users, Registered Users 2 Posts: 2,676 ✭✭✭exaisle


    Atlantic Dawn wrote: »
    She would want to see the bank first to see if she can get her name off the mortgage, bank is unlikely to do this.

    That isn't a taxation issue....


  • #6
    Atlantic Dawn
    Registered Users, Registered Users 2 Posts: 85,539 ✭✭✭✭Atlantic Dawn
    GDY151


    exaisle wrote: »
    That isn't a taxation issue....

    No but if she can't do that first step there is no taxation issue :pac:


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