Stamp Duty - buying out partner

K

Kel

Guest
Hello. I am buying out my partner's share of our jointly equally owned property. It was brand new when we purchased it 4 years ago. The property is now valued at 540K. I am paying 80K to buy my partner out. Do I have to pay stamp duty on 540K or on the 80K which is half the equity in the house?
 
When I bought out my brother, a valuation had to be done to work out the stamp duty implications. I'm afraid that I was told by my solicitor that the SD is worked out on half the value as opposed to the purchase price:(. So you'd owe 5% of 270k - €13,500
 
It will be 5% on the €270,000 property value you are buying from him. If the new mortgage is over €254,000 there will be SD on the mortgage deed of 0.1%

Sarah

www.rea.ie
 
The stamp duty, if payable, will be payable on half the market value of the house less half the mortgage. So take the value of the house, divide in two and take off half the outstanding mortgage and that is the value you are acquiring and on which you may or may not have to pay stamp duty on. If the 80K is an arbitrary figure, its not relevant. I've done a few of these recently and even Revenue are confused.

Plus if you were both first time buyers at the time and have not acquired any other property in the meantime, you may still be considered a f.t.b.

mf
 
MF1, surely the value he is acquiring is the 270K regardless of the morgage. If you buy another property(after selling first) you get no relief from stamp duty if you have a mortgage on the first property. Surely this is the same thing? My brother had to pay off his half of the mortgage, I had to pay off mine and then buy the whole property again. The SD would've been simply worked out on half the value of the property as that is what I was buying. Correct me if I'm wrong but this is what happened to me.
 
If you are using the same mortgage company, the calculation is based on the greater of 1/2 the equity or 1/2 the mortgage plus the consideration.
 
Yes it is very confusing and I think what happened is that Revenue worked originally on the premise that the soon to be complete owner was taking on the ex's current mortgage and that the mortgagee was joining in the Deed so it was quite clear that stamp duty should be on the cleared value less mortgage. BUT because so many people were doing this, and were taking on new mortgages where the mortgagee was not joining in the Deed but rather the s.t.b.c.owner was greatly increasing their mortgage with a new mortgagee to buy out the old owner and discharge them from their obligations, the old mechanism was not making any sense at all.

I may not be explaining it very well but yes Revenue will take the amount of the mortgage being assumed to reduce the sum on which stamp duty is to be calculated.

mf
 
I'm not sure about your method MFI as the deed has to recite the total consideration paid to include 1/2 the mortgage if applicable. If there is an element of gift this has to be recited. Any of these that I have done the revenue has looked for a statement of the amount outstanding on the mortgage as of the date of the deed as well as a valuation. In any event if both parties were first time buyers when they bought the house new then the poster can claim first time buyer relief again when buying out partner - see the revenue leaflet on first time buyers - sorry I don't know how to do links.
 
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