Buying out my ex fiancee

Hi there,

I currently have a joint mortgate for 230K on an house valued 420K in Raheny. My fiancee has split up with me and I'd like to buy him out. I guess, I'll need 105 cash plus 230K current mortgage.

The house has 4 bedrooms that I intend to rent. At the moment I am talking with different brokers to get the 330K that I need. Maybe I will be able to get the mortage for 35 years with repayment of 1,600 euro.

My question is: Do I buy him out or do I buy somewhere else? It seems that on the market there are only apartments (i.e. in Donagmede) that are cheaper, smaller than a house and with maintenance fees.
The houses on the market around 380K in North Dublin are very old with a lot of work plus I'll lose my FTB status.

Any suggestion? If I buy him out, do I need to pay stamp duty as we didn't pay it the first time as it was below the threshold?

Thanks
Monia

Re: Buying my ex fiancee

Monia,
My initial reaciton would be to buy him out if he is happy with that and you can get the finance. Your rental income will probably come close to covering the extra mortage (although you will need to pay tax on income above interest costs). I am not sure of the stamp duty implications as you are not married, but perhaps another poster would be able to comment on that
My thoughts are that you will end up with a smaller property with not much less of a mortgage if you were to sell and split the proceeds, and buy another place. The transaction costs with this route would be quite high, as you have the costs of selling and the costs of buying, with potentially upgrade costs also.Not to mention the non-financial cost such as a despairing search for a property that is not as nice as your current one, stress waiting for sale to close, stress waiting for bid to be accepted, etc etc.
In addition you would be unlikely to be able to rent out as many room sif you bought a smaller property so your net monthly income could end up being lower.
So all in all, look at the financial implications in detail, but don't ignore what your gut tells you!

Re: Buying my ex fiancee

Hi Monia

I agree that you are better off trying to buy him out of the house if you can get the mortgage.

If you can't get the mortgage, but you are still on good terms, you might be able to defer buying him out and he will continue to have an investment in the property market. A bit awkward, but better than getting a new house.

I think you will be treated as buying a second hand house for €210k. So you will have to pay 4% stamp duty.

Brendan

Hi there

I spoke to a solicitor and he said thta if I am able to buy him out for a share less than 127K I don't need to pay stamp duty.

Does anybody know how it works?

Regards
Monia

Try www.Revenue.ie and look at stamp duty. In fact you could email the Revenue Commissioners regarding the threshold for stamp duty on property and ask them for a leaflet or a reference to the way to claim exemption.

Ultimately the solicitor will do the paperwork but you can have an intelligent discussion if you know your rights in advance.

Hi Monia

The stamp duty thresholds are as follows for people who are not first time buyers:
Up to €127k : nil
€127k to €190.5k: 3%
€190.5k to €254k: 4%

If you buy a house or part of a house for €210k, you will have to pay 4% stamp duty. I don't think it matters, if you have to give your ex only €100k.

You may have misunderstood your solicitor
Your solicitor may have been wrong
or I may be wrong.

Brendan

Brendan is right in that it will be the value of the portion of the house being transferred that will count for stamp duty purposes- so here the half share of the house being transferred is €210,000.00- however there is the following exemption( extract from Revenue.ie site):

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.

Click to expand...

but €210000 is at the 3% threshold for FTBs.

I have spoken to the Revenues and they told me that I should not pay stamp duty as 210,000 is still under the FTB threshold (317,500).

Is this right?
Monia

Sorry, Monia, you are absolutely right- I absent mindedly pulled out my 2004 stamp duty guide instead of the current one- yes looks like you are exempt.

You should be careful what you pull out there Vanilla!

Sarah

www.rea.ie

Hi All,

I'm in an identical situation to monia. I'm slightly confused though. Is Monia still considered a first time buyer in this situation ? i.e. if you buy out... Are you still considered to be a FTB. The value of the portion of the house that I want to buy out is €205k.

Hi there,

you need to see the value of the house and divide it by two. If this amount is below 317,500 you will be still FTB and exempt from Stamp duty.
Ciao
Monia

The value of the house divided by two is €205k in my case. Is this information available in writing anywhere Monia ? Thanks very much for your help !

Hi there,

I was very confused and I called Revenue to be sure. So I was told!
Maybe you should do the same to be 100% confident.

I'll do just that. Thanks a million Monia !