Johnny and Mary own a house together which is worth €220k.
Johnny wants to buy out Mary, so he needs a mortgage of €110k.
He is going to do a further €110k on renovations, so he needs a mortgage of €220k.
And he will then have a house worth €330k.
Mary renounces her interest in the house. Then Johnny would be getting a gift of €220k which might be subject to CAT depending on who left the house.
Johnny later gives Mary €110k , so that would be a gift from Johnny and Mary would be subject to CAT.
Mary should sell her share of the house to Johnny for €110k - no tax implications.
Johnny owes Mary €110k.
The bank gives €220k mortgage to Johnny and he pays Mary.
I don't see why the bank would insist on this? They will give the mortgage money to Johnny's solicitor and insist that it not be passed on to Mary until the conveyance is completed.
Brendan