Buying sibling out

N

naidster

Registered User
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Hi there

I bought a property with my sister, i was a first time buyer for her it was a second property. I live in the property and have been paying the morgage on my own for the last few years. I am now in a position to buy her out and we have agreed a price. I am remorgaging but can only get enought to put the current morgage in my name, so I am borrowing the ammount to pay her off from a friend. My sister is buying a car from the money and would like me to make the cheque out to the person she is buying the car off. My question is this if i do this will it look like i have not paid her anything to buy her out and could i end up being chagred CGT??
 
Hi Sarah

Sorry if i am being very confusing but what i mean is if my sister had just decided to sign her half of the house over to me without me having to buy her out wouldnt i have to pay tax on this?? If so if i make the cheque out to a third party and not her I would have no proof that i bought her out and therefore could i be charged tax??
 
You might be liable for Stamp Duty but not CGT. What is the house valued at and are you buying 50% or a smaller (or greater) sum? Your solicitor should be able to advise you if it's payable.

Sarah

www.rea.ie
 
Thanks for that but really what i want to know is if i need to have proof that i have actually paid my sister for her half of the house?
 
Reading between the lines, this does not sound like a proper transaction at all. What % of the property is in her ownership? Are you not planning to use a solicitor in this process?

It seems to me that the proof of payment thing is irrelevant. You're not buying TV. Treat the transaction with the respect it deserves. Engage a solicitor. The exchange of contracts with a specific stated value is your 'proof', not a stub in your cheque book showing that you actually paid.

Maybe I'm over-reacting. Also, this borrowing from a friend piece is disturbing, but I won't go down there.
 
I agree with nt00deep. You can't just give your sister cash and say you now own the property - a solicitor must be involved to effect the legal transfer of ownership to you and the mortgage must be transferred into your name either with your current lender or A N Other. Otherwise the house is still legally owned by both of you and she can claim 50% of it when it is sold.

Sarah

www.rea.ie
 
Sorry if I sounded overly negative, and maybe condescending when I read it back. I am trying to sound alarms rather than put you off.

In a nutshell, engage a solicitor, he will focus on proof of ownership for you and the proof of payment thing will follow. Hold off on buying that car though for now.
 
Of course i am using a Solicitor!!! and have told him the amount we agreed. All i wanted to know is if i need to have proof that i paid the about to her that we agreed as the new morgage i am getting does not cover it!! I was afraid it might look like she just signed her half over to me without me paying for it.
 
I think Naidster might be referring to Gift/CAT TAX?? If you have no proof that your sister actually sold the property to you rather than signed it over via a solicitor?? If your sister effectively gave you her half of the property, then it would be subject to tax minus the allowance (amount allowed between siblings escapes me at the moment).

If your sister has an interest in another property, then selling to you would leave her liable for capital gains tax at 20% as it is not her PPR. I presume this is why she wants you to buy her a car rather than pay cash. I'd check it out with my solicitor if I were you. Suggest a straightforward transaction and let her buy the car!

As you were a first time buyer and your sister was not, then stamp duty should have been paid on the purchase price. Did you do this at the time? It seems to me that people who know more about the situation than you do are suggesting you do things that you don't fully understand. You're right to ask all the questions necessary to ease your own mind and allow you to feel secure about the transaction.
 
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