# Two names on Mortgage, One on deeds...



## barry08 (5 Feb 2008)

Hi,
Myself and my girlfriend are looking to buy a second hand house at present. My girlfriend already owns a house and therefore is not except from Stamp Duty.
However, I have not owned a house previously so we are keen to just use my name in order to avoid duty.
If we use the option of just placing one name on the deeds and both our names on the mortgage will we avoid stamp duty?
We are getting conflicting stories on this one… so any input is appreciated.


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## murphaph (5 Feb 2008)

barry08 said:


> Hi,
> Myself and my girlfriend are looking to buy a second hand house at present. My girlfriend already owns a house and therefore is not except from Stamp Duty.
> However, I have not owned a house previously so we are keen to just use my name in order to avoid duty.
> If we use the option of just placing one name on the deeds and both our names on the mortgage will we avoid stamp duty?
> We are getting conflicting stories on this one… so any input is appreciated.


If she has a mortgage interest in the property then anything you do to avoid paying stamp duty is tax evasion.


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## Apollo (5 Feb 2008)

murphaph this is isn't the case.

If she stays off title then it isn't tax evasion as she isn't entitled to gain anything if the property appreciates and is sold at some future point, i.e. she is hiding from the taxman that she owns a second property because in fact she doesn't.

To the op just a approach a bank/broker and ask them to confirm this but I'm almost positive I'm correct on this


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## murphaph (5 Feb 2008)

Apollo said:


> If she stays off title then it isn't tax evasion as she isn't entitled to gain anything if the property appreciates and is sold at some future point, i.e. she is hiding from the taxman that she owns a second property because in fact she doesn't.


Interesting, so what if the property increases in value and is sold at a later date and the g/f (who presumably will have a mortgage interest in the property) asserts her interest and wants her share of the profits? 

Being off the deeds doesn't mean you can't have a mortgage interest in a property. 

You say she "isn't entitled to gain anything if the property increases in value" which I would dispute based on recent advice from a solicitor on this very issue. My mother was off the deeds to a (commercial) property of my father but was named on the mortgage. Her solicitor told us she would have been able to claim an interest (and therefore a share) of the property as she had contributed to repaying the loan secured on the property even though she was not named on the deeds.

This is even more so with a family home as the Family Law Act kicks in and affords the other party certain rights to property even when off the deeds.

I'd seek the advice of a solicitor/tax consultant rather than a bank/broker (who have an interest in selling financial products!) on such an issue.

I can't see revenue viewing this as anything other than tax evasion.


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## ClubMan (5 Feb 2008)

Apollo said:


> murphaph this is isn't the case.
> 
> If she stays off title then it isn't tax evasion as she isn't entitled to gain anything if the property appreciates and is sold at some future point, i.e. she is hiding from the taxman that she owns a second property because in fact she doesn't.
> 
> To the op just a approach a bank/broker and ask them to confirm this but I'm almost positive I'm correct on this


The original poster has said that they will be buying jointly - in which case two names on the mortgage and one on the deeds to "avoid" _SD _would actually be evasion. This has been covered many times before and _Revenue _issued press releases about it a while back. A broker/banker is not the appropriate party to ask for authoritative tax advice. At least ask your solicitor who might be better placed to comment.


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## McGrath (5 Feb 2008)

Revenue's guidelines gave a specific example where the FTB exemption can still apply to 2 names on mortgage/one on deeds where specific conditions are met, e.g. among others, the second name on the mortgage is a parent/other benefactor's name put there at the request of the bank as a step up from being a mere guarantor. However, the parent cannot have an interest in the house or contribute to the mortgage in any way other than by way of unconditional gift to the person on the deed.

Bottom line is, as said above, if your gf is to have any interest in the house, then the FTB exemption doesn't apply.

Not only should you seek professional advice on this, but your gf should possibly get independent legal advice if there's a chance that a choice you make now may mean that she won't have any legal interest in the house.


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## murphaph (5 Feb 2008)

McGrath said:


> gf should possibly get independent legal advice


The lender may well insist on this in fact.


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## csirl (6 Feb 2008)

> Revenue's guidelines gave a specific example where the FTB exemption can still apply to 2 names on mortgage/one on deeds where specific conditions are met, e.g. among others, the second name on the mortgage is a parent/other benefactor's name put there at the request of the bank as a step up from being a mere guarantor. However, the parent cannot have an interest in the house or contribute to the mortgage in any way other than by way of unconditional gift to the person on the deed.


 
In these circumstances, Revenue generally regard living in the house as having "an interest" in the house. Where the parent goes on mortgage, but is not living in the house, they generally allow FTB status to be retained. However, they dont if the second person on the mortgage is a resident. 

All this falls out from the Constitution, so no hope of challenging. A unmarried couple cohabiting cannot ever be in a better circumstance than a married couple. As a married couple would not have FTB status in these circumstances, then an unmarried couple can never get it. Revenue are well up to speed on all these tricks and has covered them all in various amendments to the Taxes Consolidation Act over the years.


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## jergam (7 Feb 2008)

I have just done this with my boyfriend, I was not a first time buyer and he was. We looked into every option here but basically if your GF does not want to pay stamp duty then the bank will not consider her earnings as part of your loan application, as in you'd be taking out a single mortgage and not a joint one.
It's a bit unfair actually, we ended up paying the stamp duty as a couple which is fair enough, but if we ever split up and he wants to buy on his own as a sole first time buyer he will not get any FTB benefits. The only thing is that he'll get the FTB tax credits on the TRS.


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## nanor76 (13 Feb 2008)

McGrath said:


> Revenue's guidelines gave a specific example where the FTB exemption can still apply to 2 names on mortgage/one on deeds where specific conditions are met, e.g. among others, the second name on the mortgage is a parent/other benefactor's name put there at the request of the bank as a step up from being a mere guarantor. However, the parent *cannot have an interest in the house or contribute to the mortgage in any way* other than by way of unconditional gift to the person on the deed.


 
If the 2nd person on the mortgage, but not on deeds, applies for a personal loan etc., how much will their inclusion as an applicant affect their credit risk - taking into account they are not contributing to mortgage repayments by Revenue's definition?


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## nanor76 (13 Feb 2008)

jergam said:


> we ended up paying the stamp duty


 
You went to the wrong bank - I know loads of couples who have done this without paying stamp duty.

The lenders they used had no qualms with it.


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## ClubMan (13 Feb 2008)

nanor76 said:


> You went to the wrong bank - I know loads of couples who have done this without paying stamp duty.
> 
> The lenders they used had no qualms with it.


Lenders are not qualified to give tax advice and might not give two hoots if the borrowing couple are, in fact, evading tax!


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## truthseeker (13 Feb 2008)

nanor76 said:


> You went to the wrong bank - I know loads of couples who have done this without paying stamp duty.
> 
> The lenders they used had no qualms with it.


 
Would you like to explain how these 'loads of couples' did this? The rules are very clear in this regard, all parties must be FTB to avail of no stamp duty so I cannot see how loads of couples you know did this. The only way I could see it could be done would be to lie on your loan application and lie to your solicitor?


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## nanor76 (13 Feb 2008)

Truthseeker...this is the truth

I know loads of couples who have done this and I can't see an issue with it.

If it's technically illegal, then I can't see the Revenue getting hot and bothered about it.

In fact the other great abuse of these tax laws was when the rent-a-room scheme was being abused from a height by people claiming tax back on money given to parents (or never given in most cases).

Not doing this and paying stamp duty for what can only be 'moral' reasons seems truly daft.


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## budapest (13 Feb 2008)

In the past, this was possible (which would explain how you know other couples, _truthseeker_), but this is no longer the case.  The Revenue are very explicit about it now, whereas until recently, it was a grey area.


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## mf1 (13 Feb 2008)

Nanor

Here is the wording from Revenue. Revenue continue to audit "alleged" first time buyers. People who have incorrectly claimed ftb relief are in breach of the law and there is an inevitability about being found out. When ( not if) they are found out, they will face fines and penalties. At that stage, the "victims" of their "mistake" will undoubtedly seek a scapegoat to be blamed for their misfortune. Perhaps, you might like to explain to the loads of people that  you know have done this, the error of their ways and the advisability of 'fessing up sooner rather than later.

and as for: 

"The lenders they used had no qualms with it."

Frankly, any reliance on a banks qualms as justification for tax fraud is entirely laughable. 

And finally, in the event of an unhappy split or separation between any of these couples, one of them may well find themselves trying to explain to a Court why, since they are a tax evader, a Court should assist them in asserting their (il)legal entitlement to half a property. 

Food for thought. 

mf




What is the position where the purchase monies are not provided entirely by the first time buyer?
To qualify for the relief the entirety of the purchase monies, including any borrowings, must be provided by the first time buyer. Any person, who provides part of the purchase monies or who is a party to any borrowings relating to such purchase, is also regarded as a buyer of the house and the relief will not be available unless that other person is also a first time buyer.
The basis for this treatment is that, in such circumstances, the house is held for the person providing the monies used in the purchase of the house by way of a resulting trust presumed in favour of that person. This treatment applies whether or not all the parties providing the purchase monies, or all the parties to any borrowings, are actually named in the deed of transfer.
Notwithstanding this treatment, to take account of particular situations, Revenue is prepared to accept that a child, who is a first time buyer, will not be precluded from claiming first time buyer relief where a parent acts as a co-mortgagor in the following circumstances:
•	The transfer of the house is taken in the name of the child. 
•	It is the intention of both the child and the parent that the parent is not to take a beneficial interest in the house. 
•	The parent has been joined into the mortgage solely at the request of the lending institution for the purpose of providing additional security for the monies being advanced for the purchase. 
•	It is not intended that the parent will be contributing to the repayment of the mortgage in the normal course. 
Where the four conditions set out above are satisfied, Revenue will treat the parent as effectively acting in the role of guarantor for the loan. 
Consistent with the above approach, Revenue will also be prepared to treat persons other than parents of the first time buyer, who satisfy similar conditions to those set out above, as effectively acting in the role of guarantor for the loan. Their involvement in that capacity will not be treated by Revenue as precluding a claim to first time buyer relief. In such circumstances the conditions are as follows: 
•	The transfer of the house is taken in the name of the first time buyer. 
•	It is the intention of both the first time buyer and the other person that the other person is not to take a beneficial interest in the house. 
•	The other person has been joined into the mortgage solely at the request of the lending institution for the purpose of providing additional security for the monies being advanced for the purchase. 
•	It is not intended that the other person will be contributing to the repayment of the mortgage in the normal course. 
The relief from stamp duty is intended to benefit only genuine first time buyers and Revenue will continue to use our audit programme to ensure that there is no abuse of the relief.


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