Buying out partner from house

Genghis

Hi all.

Bit of a tricky situation here.

I am buying somebody out of a house at the moment. We have sorted things out in principle, but what I would like to know are the practicalities of changing over ownership of the house, and responsibility for the mortgage solely to my own name.

I obviously get legal advice as well, but I would like to hear of anyones experience in this situation. I am hoping to get this sorted over the next 4-6 weeks.

MorningStar

I had a friend who went through similar. THe big problem he had was the price of the property. Each got a valuation and they varied a fair bit. They originally agreed the would split the difference but as she was being bought out and her valuation was the highest she thought her valuation was fair. So they had to haggle over the price. It all took a lot longer than 4-6 weeks, I think it was 6 months when dealing with the house.
Not sure but isn't there stamp duty involved too? I remeber they original though their wouldn't be because half the house wasn't enough to trigger stamp duty. Not sure but I think it was worked out on the basis of the full house but only paid on half the value. That could be a nasty surprise and who pays it both or just the one buying?

Beruthiel

see your solicitor
it will be much the same as actually buying a house I imagine, ie - paperwork required to have the house solely in your name, her signing off her percentage, land reg. fees because your name will have to be on their paperwork.

tabatha

i went through this a few years ago. u are liable for stamp duty on the half of the house you are buying off the other person. u really need a solictor as all the deeds and stuff require one.

Genghis

Thanks tabatha. Never thought about stamp duty!

If you don't mind talking about it, could you tell me a bit more? How long did the process take? Did you keep the same mortgage provider or move to a different one. What do solicitors charge for this type of work - are we talking a % or a fixed fee?

Victor

See: http://www.boards.ie/vbulletin/showthread.php?t=173124

I suggest more than one solicitor, one for each party to give advice and then one of them can do the conveyance.

Genghis wrote:

Did you keep the same mortgage provider or move to a different one.

There should be no real problem, go with what you feel is best, given your particular circumstances.

Genghis wrote:

What do solicitors charge for this type of work - are we talking a % or a fixed fee?

It varies, you can probably haggle a deal (do this beforehand). Note it is usually fee + expenses.

Genghis

Thanks Victor, thats useful advice. I imagine my solicitor will do the conveyance, my partner may or may not choose to use a solicitor, but that is for their discretion, I guess.

homeOwner

According to the revenue web site it appears you no longer have to pay stamp duty to buy the other person out if you were both first time buyers.

[From www.revenue.ie under leaflets and guides -> stamp duty -> click on the first link about whats new for 2005...]


"What is the position where a person, who had obtained first time buyer relief on the joint purchase of a house with another first time buyer, subsequently acquires the other joint owners interest in the house?

A person who obtained first time buyer relief on the purchase of an interest in a house would not be precluded from obtaining first time buyer relief on a subsequent purchase of another interest in the same house provided that person has not purchased another house or part of another house in the intervening period. "


It could save you a couple of grand!

MorningStar

homeOwner wrote:

According to the revenue web site it appears you no longer have to pay stamp duty to buy the other person out if you were both first time buyers. etc...

When I read that it is only talking about intrest relief even though under stamp duty it never mentions stamp duty as such. Stamp duty is really charged where there is a transfer of property ownership and I can't see it being avoided.
It could be a lot more than €2k if they don't see it as a FTB purchase. I don't know for sure but I don't think that link actually changes it

Genghis

Thanks homeowner and MorningStar. Tha information certainly is useful to me wrt mortgage interest relief, which is going to be even more important when the burden of the entire mortgage is on my back! I presume that the DofE won't be coming after me for FTB grant either (don't think they actively pursue such matters anyway ... besides house is almost five years bought, which is the term iirc in which you are not supposed to sell first house).

I have also been doing my own research. Apparently, regardless of situation, any property purchase up to a value of €127,000 is exempt from stamp duty anyway. Fortunately, the value we have agreed on the house is less than €254,000; I presume that stamp duty would only be liable on the half of this I do not own already, in which case it appears I am exempt.

Am speaking to a solicitor tomorrow and will be able to clarify more.

On another note, given the incidence of this sort of thing, shouldn't there be some kind of information guide available publicly? Maybe there is, but I haven' come across it ...

Victor

Genghis wrote:

I have also been doing my own research. Apparently, regardless of situation, any property purchase up to a value of €127,000 is exempt from stamp duty anyway.

Not the purchase, the property. You can buy a €1m property in 10 slices and say "sorry, Mr. Taxman, each purchase is under the threshold". Be careful on this. Also note there are different scale and threasholds for stamp duty depending on the type of transaction.

Fortunately, the value we have agreed on the house is less than €254,000;

I'm not sure whether they will treat this transaction as "at arms length" or not. You can't agree to value somethign at say €1 purely to avoid the stamp duty.

I presume that stamp duty would only be liable on the half of this I do not own already

Possibly, but see above and talk to solicitor.

ck1

Unfortunately you cannot put your own value on the transaction, it must be exchanged at market value otherwise you are considered receiving a gift and this does not avoid the stamp duty on such transactions. However, if the party are direct lineal relation - e.g. grandparents, aunts, etc., to you stamp duty is halfed. Can't remember the exact terminology but it is covered in the Stamp Act.

If however you were married, there would be no stamp duty and if at the time of initial purchase you were first time buyers and the house is passed over to say the wife, the husband can then go out an buy another house and still be considered a first time buyer.