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Paying of girlfriends mortgage

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  • 17-04-2021 11:42am
    #1
    Izy
    Registered Users Posts: 407 ✭✭


    Hi all,

    I’m looking into selling my house and use the profit to clear part of my girlfriends mortgage.

    We both have properties that we got before we met, they are our primary residence, neither was ever rented, but during the last year we spent most in hers ( COVID reasons and travel ) and obviously discovered that there is no point in paying 2 sets of mortgages and bills...

    I can make possibly a 100k profit on selling my house. Two main questions...

    1. Do I need to pay any form of tax on that profit?

    2. What is the most cost effective way of me being able to use the profit to clear part of her mortgage?

    I know the easiest option is to get married and than there isn’t any tax implications on gifting her the profit ( or Am I wrong? )...

    Any info is greatly appreciated.

    Thanks


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    #2
    [Deleted User]
    Posts: 0 ✭ [Deleted User]


    Izy wrote: »
    Hi all,

    I’m looking into selling my house and use the profit to clear part of my girlfriends mortgage.

    We both have properties that we got before we met, they are our primary residence, neither was ever rented, but during the last year we spent most in hers ( COVID reasons and travel ) and obviously discovered that there is no point in paying 2 sets of mortgages and bills...

    I can make possibly a 100k profit on selling my house. Two main questions...

    1. Do I need to pay any form of tax on that profit?

    2. What is the most cost effective way of me being able to use the profit to clear part of her mortgage?

    I know the easiest option is to get married and than there isn’t any tax implications on gifting her the profit ( or Am I wrong? )...

    Any info is greatly appreciated.

    Thanks

    Are you putting your name on the deeds of your girlfriends house - so you'll own (at least 100k worth) in the event of a split? I know nothing of your relationship or how long you've been together but all relationships can end - need to protect yourself too.


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    #3
    Mr. Incognito
    Registered Users Posts: 9,798 ✭✭✭Mr. Incognito


    Don't do it until you are married and get legal advice either way.

    Getting that advice now will mean you won't need it later


  • Options
    #4
    Izy
    Registered Users Posts: 407 ✭✭Izy


    Yes, my name would be going on the deeds...

    We both are getting our solicitors advice on it independently...


  • Options
    #5
    [Deleted User]
    Posts: 0 ✭ [Deleted User]


    Izy wrote: »
    Yes, my name would be going on the deeds...

    We both are getting our solicitors advice on it independently...

    I could be wrong (seriously I know nothing), but if your name is going on the deeds then its not really a "gift" to your girlfriend per se - as you're just paying off the mortgage on your own house?


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    #6
    downtheroad
    Registered Users Posts: 2,754 ✭✭✭downtheroad


    No capital gains tax on profits from sale of your principal private residence.

    If you were married you can make any gift to your wife and she won't have any capital acquisition tax liability.


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    #7
    GarIT
    Registered Users Posts: 8,671 ✭✭✭GarIT


    Student_111 wrote: »
    I could be wrong (seriously I know nothing), but if your name is going on the deeds then its not really a "gift" to your girlfriend per se - as you're just paying off the mortgage on your own house?


    Or possibly buying half the house. The fairest thing, with OP's name going on the deeds would be to pay the GF half of the current market value of the house and then just be a joint owner of it.


    As for the tax question. If you don't live in the house and you didn't live in it as your main residence for at least 5 (I think) years then you have to pay 33% tax on the difference between the price you bought for and price you sell for.


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    #8
    corks finest
    Registered Users Posts: 8,628 ✭✭✭corks finest


    Student_111 wrote: »
    Are you putting your name on the deeds of your girlfriends house - so you'll own (at least 100k worth) in the event of a split? I know nothing of your relationship or how long you've been together but all relationships can end - need to protect yourself too.

    Good point my late brother practically paid for his then girlfriends mortgage for 6-7 years, in the end she stopped giving what he gave her to the bank,house gone--- he'd nothing on paper at all to show or prove when he eventually went for a mortgage himself,I'd be cautious


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    #9
    Izy
    Registered Users Posts: 407 ✭✭Izy


    Thanks for the replies so far.

    I’m only “out” of my house a year, but most of my stuff is still there, I still stay there a night every once in a while, still have broadband and all the bills too...

    The name going on the deeds isn’t an issue for me or the girlfriend ( we agreed to have my name on it as a protection for me if I to hand over 100k ) but as there is mortgage against the house it might be an issue for the bank?

    According to the bank, this happens fairly often. They gave her 2 options.

    1. Me just gifting her the money ( they obviously don’t care about tax implications )

    2. Change the mortgage to a joint mortgage, this would mean for both of us to start a new mortgage application process with a full assessment from the bank ( and more solicitor fees
    )

    That’s why I was wondering in my 2nd question, about the most cost effective way of paying of part of her mortgage without her needing to pay any “gifting” ( not sure if this would be the correct word for it ) tax...

    Don’t want to end up with 100k and ending up paying 33% tax and another 2-5k to solicitors...

    Thanks everyone for looking out for me too in the process and advising me to protect myself! Much appreciated.


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    #10
    GarIT
    Registered Users Posts: 8,671 ✭✭✭GarIT


    Izy wrote: »
    Thanks for the replies so far.

    I’m only “out” of my house a year, but most of my stuff is still there, I still stay there a night every once in a while, still have broadband and all the bills too...

    The name going on the deeds isn’t an issue for me or the girlfriend ( we agreed to have my name on it as a protection for me if I to hand over 100k ) but as there is mortgage against the house it might be an issue for the bank?

    According to the bank, this happens fairly often. They gave her 2 options.

    1. Me just gifting her the money ( they obviously don’t care about tax implications )

    2. Change the mortgage to a joint mortgage, this would mean for both of us to start a new mortgage application process with a full assessment from the bank ( and more solicitor fees
    )

    That’s why I was wondering in my 2nd question, about the most cost effective way of paying of part of her mortgage without her needing to pay any “gifting” ( not sure if this would be the correct word for it ) tax...

    Don’t want to end up with 100k and ending up paying 33% tax and another 2-5k to solicitors...

    Thanks everyone for looking out for me too in the process and advising me to protect myself! Much appreciated.




    Your name going on the deeds most likely won't be allowed by the bank. If you gift her the money you pay 33% of the amount gifted in tax minus the first 3k.


    You best option is 2. Almost as if her mortgage is done away with and you rebuy the house together with you matching the amount equity she currently has.


    You won't have to pay tax on selling your house if you bought it to live in rather than as an investment and have lived in it.


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    #11
    Unknownability
    Registered Users Posts: 916 ✭✭✭Unknownability


    GarIT wrote: »
    Your name going on the deeds most likely won't be allowed by the bank. If you gift her the money you pay 33% of the amount gifted in tax minus the first 3k.


    You best option is 2. Almost as if her mortgage is done away with and you rebuy the house together with you matching the amount equity she currently has.


    You won't have to pay tax on selling your house if you bought it to live in rather than as an investment and have lived in it.

    I can never see what people think banks won't want to add the person onto the deeds? An extra person generally lowers the risk, the issue is trying to get someone off the deeds.


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    #12
    ari101
    Registered Users Posts: 2,835 ✭✭✭ari101


    Your own sounds like a PPR, ok you've been kipping in the gf's in Covid but should be fine just to sell the house with tax exemption...?

    Don't gift her money - 1. you are not married so she would have almost no exemption from CAT on it. 2. as good as your relationship might be you have no come back if things went bad and she kicked you out.

    Might cost a bit more but get a joint mortgage/name on deeds but is the way to go. I imagine the bank won't allow a second name on deeds without joint mortgage, as if she defaulted on the mortgage, you could stop them selling the house and they would only be able to take the proceeds of her half to pay the debt. Much riskier position for them.


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    #13
    GarIT
    Registered Users Posts: 8,671 ✭✭✭GarIT


    Unknownability wrote: »
    I can never see what people think banks won't want to add the person onto the deeds? An extra person generally lowers the risk, the issue is trying to get someone off the deeds.


    It's harder to repossess a house from someone who is not named on the mortgage. It doesn't reduce any risk if he is not named as owing them anything.


    He has a right to continue living in the house even if the bank repossess half of the house.


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    #14
    Stoolie
    Registered Users Posts: 19 ✭Stoolie


    Izy wrote: »
    Yes, my name would be going on the deeds...

    We both are getting our solicitors advice on it independently...


    If you are getting advice from your Solicitor, why ask here ?? Listen to the Professional you are paying for advice


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    #15
    HotDudeLife
    Closed Accounts Posts: 157 ✭✭HotDudeLife


    i'd advise you to stop watching disney films and wise up on female nature.

    OP obviously has little experience with women/relationships when things go south.

    This is a lose-lose situation for yourself OP, please take my advice.


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    #16
    GarIT
    Registered Users Posts: 8,671 ✭✭✭GarIT


    HotDudeLife wrote: »
    i'd advise you to stop watching disney films and wise up on female nature.

    OP obviously has little experience with women/relationships when things go south.

    This is a lose-lose situation for yourself OP, please take my advice.


    I wouldn't say it's female nature but more the current court system.


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    #17
    Izy
    Registered Users Posts: 407 ✭✭Izy


    HotDudeLife wrote: »
    i'd advise you to stop watching disney films and wise up on female nature.

    OP obviously has little experience with women/relationships when things go south.

    This is a lose-lose situation for yourself OP, please take my advice.

    Thanks.

    What would you do in my situation if you don’t mind me asking?


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    #18
    Izy
    Registered Users Posts: 407 ✭✭Izy


    Stoolie wrote: »
    If you are getting advice from your Solicitor, why ask here ?? Listen to the Professional you are paying for advice

    Sorry that should’ve said that we both will be getting advice. Waiting for the house sale to go through before taking the next step. My apologies.


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    #19
    GarIT
    Registered Users Posts: 8,671 ✭✭✭GarIT


    Izy wrote: »
    Thanks.

    What would you do in my situation if you don’t mind me asking?


    Break up with her :pac:


    If you have children with a woman in Ireland you are at a large risk of losing you house or your half of the house if you break up. There's not much that you can do to combat that.

    On paper you won't lose the house, you will be entitled to half the value of the house when the child leaves full-time education but it will be a nightmare to get and you won't be able to use the house or make any money off your asset in the meantime. If there's an outstanding mortgage you could be required to keep paying the mortgage while not being allowed to use the house. And this will prevent you from getting a mortgage on a house of your own.

    In some cases where there is the main property and a rental property, a judge will let the man take the rental property and the woman gets the main home.


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    #20
    Izy
    Registered Users Posts: 407 ✭✭Izy


    GarIT wrote: »
    Break up with her :pac:


    If you have children with a woman in Ireland you are at a large risk of losing you house or your half of the house if you break up. There's not much that you can do to combat that.

    On paper you won't lose the house, you will be entitled to half the value of the house when the child leaves full-time education but it will be a nightmare to get and you won't be able to use the house or make any money off your asset in the meantime. If there's an outstanding mortgage you could be required to keep paying the mortgage while not being allowed to use the house. And this will prevent you from getting a mortgage on a house of your own.

    In some cases where there is the main property and a rental property, a judge will let the man take the rental property and the woman gets the main home.

    No children involved.

    At the moment there’s 2 sets of mortgages being paid by 2 single people. I don’t want to rent out my house as I’ve friends who rented a place and had nothing but hardship.

    Would I be better of investing the money and be contributing towards her mortgage, so if all the predictions here come true and our relationship doesn’t have a “Disney” happy ever after ending, I’ll have to money to buy a new house?

    It’s sad that the reality of life for most people is to not trust your other half unless married to her/him ( and maybe not even after that )


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    #21
    YellowLead
    Registered Users Posts: 7,661 ✭✭✭YellowLead


    Izy wrote: »
    No children involved.

    At the moment there’s 2 sets of mortgages being paid by 2 single people. I don’t want to rent out my house as I’ve friends who rented a place and had nothing but hardship.

    Would I be better of investing the money and be contributing towards her mortgage, so if all the predictions here come true and our relationship doesn’t have a “Disney” happy ever after ending, I’ll have to money to buy a new house?

    It’s sad that the reality of life for most people is to not trust your other half unless married to her/him ( and maybe not even after that )

    It does beg the question why not get married? If you are planning on giving up your independent house and help her pay for hers - would you not commit to each other, or it’s that you don’t need or care about the piece of paper?


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    #22
    Izy
    Registered Users Posts: 407 ✭✭Izy


    YellowLead wrote: »
    It does beg the question why not get married? If you are planning on giving up your independent house and help her pay for hers - would you not commit to each other, or it’s that you don’t need or care about the piece of paper?

    It’s the last there. Don’t need nor care for the piece of paper...


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    #23
    GarIT
    Registered Users Posts: 8,671 ✭✭✭GarIT


    Personally I'd find out the value of the house, and subtract how much she owes, leaving how much she has. Pay her half of the value she already paid off/built up, so you are even on what has been paid in and then get a joint mortgage for the rest that is owed. Any money left over keep for yourself.


    If it comes to a date in court 1, 5, 10 or 20 years down the line don't expect it to go well for yourself but I don't think there is much you can do about that.



    Or keep your own house, rent out all but your room on the rent a room scheme. Pay the gf rent. I know you say it's hastle but it's so much easier than starting with nothing after breaking up.



    But really do whatever you legal advice says.


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    #24
    CIARAN_BOYLE
    Moderators, Sports Moderators Posts: 14,599 Mod ✭✭✭✭CIARAN_BOYLE


    Izy wrote: »
    It’s the last there. Don’t need nor care for the piece of paper...

    Its a piece of paper that gives you a number of legal protections.


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    #25
    ari101
    Registered Users Posts: 2,835 ✭✭✭ari101


    CIARAN_BOYLE wrote: »
    Its a piece of paper that gives you a number of legal protections.

    And possible tax advantages :D


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    #26
    GarIT
    Registered Users Posts: 8,671 ✭✭✭GarIT


    ari101 wrote: »
    And possible tax advantages :D


    Only if one of them earns under €35k or has significant medical expenses but yeah.


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    #27
    The DayDream
    Registered Users Posts: 508 ✭✭✭The DayDream


    But you kind of do have a need for the piece of paper: this is the need. Maybe you have a suspicion that the 100k would take a big hit from the big day and then the mortgage not get cleared? which is a valid concern. Tbh I would say if you aren't getting married do not do this, you're trying to get the best of both worlds here and could end up with the worst of both.

    It's always been my dream to be able to afford a house all my own that I didn't have to share with anyone and that if any relationship went south (or even after an argument) I had my own place to retreat too and be secure. It's an immense luxury that unfortunately never happened for me and never will.

    If it ever had/did, there is no way in heck I would ever consider selling it to pay off a girlfriend's place, no matter how in love we were.

    You may think you're 'practically living together' now but you actually are not even officially living together. It might not seem like much difference but it could be, you never know. Lots of couples break up after moving in together. I think it's crazy to think of selling your house before youve even taken that step and seeing how it goes.

    It just seems like a situation ripe for messiness and resentments. She's been there longer and will always feel like it's 'her house', while you will be saying, 'hey this is my house now too!'

    I would keep my house and then sell up at a later date. House values are only going to go up as long as we have a government of landlords who want supply kept low and especially with all the covid babies on the way (2 of my sisters and 2 first cousins of mine are preggo at the moment)


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    #28
    grogi
    Registered Users Posts: 8,615 ✭✭✭grogi


    I would advice against paying off any mortgage right now. With current rates, housing crisis and money printing, it is time to take more credit and buy more property, not to clear existing mortgage.


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    #29
    joe35
    Registered Users Posts: 446 ✭✭joe35


    Could you not rent your house to the local authorities. Long term lettings for 20 years. I done that with my residence. I actually drove into the estate today and it's the first time I seen the house in 5 or 6 years. Great job with a guaranteed income every month


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    #30
    Izy
    Registered Users Posts: 407 ✭✭Izy


    joe35 wrote: »
    Could you not rent your house to the local authorities. Long term lettings for 20 years. I done that with my residence. I actually drove into the estate today and it's the first time I seen the house in 5 or 6 years. Great job with a guaranteed income every month

    I did think of this, but when I read the requirements I gave up on the idea...

    And this wouldn’t solve my issues if we did break up as I couldn’t get the house back from the council... if I’m correct. ( I might not be )


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    #31
    joe35
    Registered Users Posts: 446 ✭✭joe35


    Izy wrote: »
    I did think of this, but when I read the requirements I gave up on the idea...

    And this wouldn’t solve my issues if we did break up as I couldn’t get the house back from the council... if I’m correct. ( I might not be )


    There is an option to get the house back after 10 years. You receive 80% of the rental market. The rent received could go towards your rent if things didn't work out with the girlfriend. (The longer you stay with the girlfriend the less time you would have to live in a rented property)

    There's no quick solution, but thankfully I've had no problems with the house rented, 8 years later, (just asked the now wifeðŸ˜), and 3 children.

    It did take a bit of time to sort out with the council but only 2 months I think. It's just a few certs required from electrical and plumbing. Was hassle free.


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