Unmarried couple moving/selling house question

New-Red

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Hi, it looks like myself and my partner will be splitting up and we bought house as "Joint tenants" legally but I put in 175k and she only put in 25k so she's now happy enough if I repay her the 25k and then she would move out and remove her name from deeds.
The big question here really is would there be any potential tax implications to this?
So if house is worth 200k and I'm paying her 25k for her legal share could Revenue be interested? Of course I have records to show it was my not her who paid 175k of it anyway if it coes to that. Im just checking a "gift tax" wouldnt apply or anything like that before we do it?
Thanks!
 
I doubt if Revenue would have any interest in this. So go ahead.

In theory...
If you bought the house for €200k and it's now worth €400k, she is giving up €50k of value for €25k and it could be argued that there is a gift of €25k. In fact, it could be argued that she should get here money back and half the increase in value.

If you bought the house for €400k and it's now worth €200k, then she could be deemed as giving a gift to you.

But as I say, Revenue has no interest in such genuine transactions.

Have you got the bank's agreement to removing her name from the mortgage? If not, is your salary sufficient to have your the mortgage in your sole name?

Brendan
 
Hi Brendan, thanks for the reply. There is now no mortgage on the property, solicitor is holding the deeds since I cleared mortgage. So to give you the exact figures, we bought house for 211,000 and I would say the value might have increased to circa 220,000 so if she removes her name from deeds then going on what you said there the only tax I would have to pay is on the 9,000 property value increase?
Is that right?
And it wouldn't be deemed a "Gift" from her to me to have her name removed from deeds, no?

thanks a million for your help :)
 
There is no tax payable on your PPR. The increase in value is only €9k. An eight of which is due to your partner so their benefit is €1.2k which is well the €3k yearly gift allowance.

I would be happy to say you can accept the gift with no tax liability.

Good to see you your partner is being fair with you.
 
Ok so one more option has popped up and again, would apreciate advice from tax persepective please. Again, just to keep figures simple, lets say I put in 175 and house worth 200 so she put in 25, now shes asking about buying me out. So if I sell to her for 175 does it become a gift or does same rules apply as previous question earlier in the thread?
Sorry for all the questions, we're just trying to figure the best way of doing this and avoiding any tax pitfalls while considering the options.
Again obviously Im asking because strictly speaking we're joint tenants so if shes paying me my 175 for my half its above market value but again same situation as I typed out earlier, we're both basically getting back what we put in. So would previous answers still hold up in this situation?
Thanks a mill ;)
 
If you are selling below market value ie your €175k is actually worth €180k on the open market then you are gifting €5k to your partner.

So tax would be due on the difference between the €5k and the €3k yearly gift tax exemption. So tax of 33% (check this fig being a while since I checked it) on the difference of the €2k.
 
Thanks Horseman, but considering legally shes "joint tenancy" on the house then its Private Principal Residence for both of us and if strictly speaking legally she co-owns the house (even if she actually only put 25k into it) am I not therefore selling my half for way above current market value rather than under it? If you know what I mean?
Or does it work back based on what we both put in so if she put in 25k then the best thing might be to work out current value of house and deduct 25k from it and sell my share of it for that price to her?
God it's totally NOT my area of expertise :)
 
The idea of joint ownership is normally based on the premise that you would either marry or become common law husband and wife. This I think is three years if children are involved and five years if no children involved.

If you sell your half of the property to your partner you have given them a gift of the difference between what they contributed and the value of it.

While this is your decision it seems a bit odd that you are effectively giving your ex partner a gift of €75k for nothing.

If you are still want to proceed this way can I direct you to obtain specialist tax advice.
 
Hi New Red

If I own a property worth €200k and sell it to a friend for €100k, Revenue would deem that as a gift and the recipient should declare it as such.

Revenue is not interested in what you are doing. She is paying you €175k for your share of the house which is worth €175k.

If your ex got really stroppy and claimed that her interest was worth €100k, there could well be a legal issue between you and your ex.

But Revenue is not going ask you to supply the contracts and the agreements.

Contrary to the widespread notion - they are not zealots seeking to impose artificial tax interpretations on everyday transactions. (They will try to collect tax on artificial transactions.)

Go ahead and do whatever suits you best. Get it done and over with. Don't worry about tax.

Has your ex the means to buy you out?

Brendan
 
Thanks Brendan and Horseman.

@ Brendan, Yes she does indeed.

@ Horseman, I wouldn't want to be gifting her 75k, the idea would be to take current market value of the house and then deduct the 25k she put in towards buying the house because this is hers so it needs to be deducted. So if we get an actual valuer in and work out exact value and then deduct 25k from it then that's the figure I would ask her to pay me to go. I probably just worded my question badly earlier in my post
 
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