CAT on deposit for a house

guarcross

hi there
not sure if this should be in mortgages or taxation. apologies if the subject has been up before but just looking for clarity on options in this scenario. In process of buying house and my partner (co-habiting with children) has received a gift from her dad towards deposit on house. We have been approved for a mortgage and everything seemed kosher. Now we are a few months into the process of buying a house it appears that once we get a joint mortgage i will be liable for a few k tax bill as she will effectively be gifting me half the deposit.
Now i have no problem paying my tax but this feels onerous and does not take into account our circumstances in any way treating us as strangers effectively. That aside is there a reasonable means by which we can mitigate the amount we have to lose in tax. As i see it our options are

1 get married - will take 3 months from now at least and timing not ideal but can be done . If we are married by time the transaction goes through i presume i am not liable for the CAT?

2 Do any banks do tenants in common mortgage?? Is it a thing in ireland?

3 Is there an alternative way to structure the mortgage that means there is not a transfer/ gift from partner to me? any suggestions welcome.

For the record i am not looking for ways or means to avoid tax and am happy to pay my dues as a citizen. would like an idea of the options and if there is no way around it then we will just postpone purchase and get married. Just seems unfair that not being married costs us so deep in the purse in this situation.

scheister

guarcross wrote: »

hi there
not sure if this should be in mortgages or taxation. apologies if the subject has been up before but just looking for clarity on options in this scenario. In process of buying house and my partner (co-habiting with children) has received a gift from her dad towards deposit on house. We have been approved for a mortgage and everything seemed kosher. Now we are a few months into the process of buying a house it appears that once we get a joint mortgage i will be liable for a few k tax bill as she will effectively be gifting me half the deposit.
Now i have no problem paying my tax but this feels onerous and does not take into account our circumstances in any way treating us as strangers effectively. That aside is there a reasonable means by which we can mitigate the amount we have to lose in tax. As i see it our options are

1 get married - will take 3 months from now at least and timing not ideal but can be done . If we are married by time the transaction goes through i presume i am not liable for the CAT?

2 Do any banks do tenants in common mortgage?? Is it a thing in ireland?

3 Is there an alternative way to structure the mortgage that means there is not a transfer/ gift from partner to me? any suggestions welcome.

For the record i am not looking for ways or means to avoid tax and am happy to pay my dues as a citizen. would like an idea of the options and if there is no way around it then we will just postpone purchase and get married. Just seems unfair that not being married costs us so deep in the purse in this situation.

Gift splitting rules could apply here meaning the gift is coming form your OH's father and not her.

The below 2 are me shooting from the hip but tax advice should be obtained

Would it be possilbe have the deeds not 50/50 and take account of her paying the 30k into the house that you are not matching.

You also have an life time limit from a stranger. For now both your partner and her father are in this group. Assuming you have no prior gifts in the group no tax should arise this time.

Other option may be the full 30k is not spent on the house but its contents would that be an expense of the father rather then a gift from him.

DankeyKang

As mentioned above if money from father used by both of you as the deposit for the house, will be deemed as a gift from father to each of you 50/50.

You can receive 16,250 tax free from third party (presuming you haven't already) plus 3,000 small gift tax free from him so total 19,250. Unless the gift was more than 38,500 you won't have to pay any tax. Her half will come out of her 335k threshold.

Using the money to furnish house is still deemed as a gift the same way so that doesn't make sense.

Having the mortgage done so that she owns gift amount more equity than you is a question for a solicitor but I imagine is more complicated in terms of getting the mortgage from the bank, if at all possible.

Getting married would not change anything as the 50% gift is deemed from the father to you.

jimmy456

how about a loan from your missus to you and then she can forgive it on your wedding night?

DankeyKang

jimmy456 wrote: »

how about a loan from your missus to you and then she can forgive it on your wedding night?

Sure how about we don't declare any gift at all.

Revenue are a lot smarter than most think.

jimmy456

Where is the non declaration?
1. Daughter receives tax exempt gift from Dad. - All above board
2. Daughter makes a loan for half the deposit to her boyfriend. - No Gift and all above board
3. Years later they get married and she forgives the loan. - This is a gift but it is between spouses to tax exempt.

Unless I am missing some deeming provision?

guarcross

thanks for the suggestions.
We have cycled through all those scenarios.
It is a bit more than the threshold for tax.
Loan is not an option as will be seen by the revenue as an evasive measure i would think - essentially a gift. To qualify this i did discuss with CAT to see if anyway around it and so now i am not taking any chances whatsoever regarding liability.
The issue arises for the revenue when my partner puts her part of the gift into the deposit. She is gifting me the money as we are joint mortgagees. It doesn't come from her father to me at all but via her.
This is actually solved by marrying as there is no tax liability between spouses.

We cannot seem to get a bank to give us anything other than a joint mortgage - very frustrating as we thought it was sorted and now it seems clock is reset. Banks obviously still smarting from 2008 and their leniency meaning they don't deviate from the script.

DankeyKang

guarcross wrote: »

thanks for the suggestions.
We have cycled through all those scenarios.
It is a bit more than the threshold for tax.
Loan is not an option as will be seen by the revenue as an evasive measure i would think - essentially a gift. To qualify this i did discuss with CAT to see if anyway around it and so now i am not taking any chances whatsoever regarding liability.
The issue arises for the revenue when my partner puts her part of the gift into the deposit. She is gifting me the money as we are joint mortgagees. It doesn't come from her father to me at all but via her.
This is actually solved by marrying as there is no tax liability between spouses.

We cannot seem to get a bank to give us anything other than a joint mortgage - very frustrating as we thought it was sorted and now it seems clock is reset. Banks obviously still smarting from 2008 and their leniency meaning they don't deviate from the script.

I realise that the gift technical will go from the father's account to hers to yours, but it will be deemed by Revenue as a gift from the father to you.

DankeyKang

jimmy456 wrote: »

Where is the non declaration?
1. Daughter receives tax exempt gift from Dad. - All above board
2. Daughter makes a loan for half the deposit to her boyfriend. - No Gift and all above board
3. Years later they get married and she forgives the loan. - This is a gift but it is between spouses to tax exempt.

Unless I am missing some deeming provision?

Still deemed as a gift from father to him indirectly at time of point 2.