Building new house at side of existing house - slightly different question...

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gc2006

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Hi all - I own a house in Dublin 12 which has room on the side to build a 2 bed house. This house is in my own name. I am looking to build a 2 bed, seperate house on the side of this. This has been done on our road so their is a precedent there. I have done up the costings and know what I need to build this house.

As my mortgage is quite high it's unlikely the bank would give me the money / mortgage required for this build. However, I've been living with my girlfriend for quite a while and she would be able to comfortably able to get a mortgage to fund this build. However, the deeds of the house are in my name. The option exists to put her on the deeds of the house, and the only real cost would be the solicitors fees as she's a FTB, but what would be preferable (at present she has no mortgage, so the bank would easily give her the money. however if we went in together my mortgage + this mortgage might be too high for us to take on together. The reason being my salary has decreased a bit since I got my mortgage and now I doubt the bank would touch me on my own, if I was applying again for what I currently owe)

My questions are:
1 - does the site need to be in your name, or partially in your name to get a build mortgage? So the site would need to be in (or half in) her name?
2 - if so, how would I got about her ending up with all, or half of the site. Am I right to say the options are either:
- she goes on the deeds (as mentioned before this isn't ideal)
- OR she buys the site from me. In which case I guess you need to get PP, a market value and I'd have some sort of tax implication
3 - if so what would the tax implication be? Is it 20% cap gains OR if I was able to show that selling the site devalued the current property etc, could that be offset on the cap gains? So if house worth 350 now, and 320 after site sold, and site sells for 100k (for example) how would that end up?]

Again adding to the deeds is not the favoured idea, so if we did want her to get the site (or some of it) how would that work?
 
Arc thank you for that. Unfortunately, like a lot of people who bought c. 3 years ago I would have little or not equity. I got a valuation done recently, and my Loan to Value ratio is close to 90% at present. With banks only loaning 92% this would be a problem.

I simply cannot gift the land to my girlfriend as she is not family and there would be a tax implication. Although we are living together so may be partners in the eyes of the law but I doubt this.

However - one thing you said did hit home. We would have enough savings to cover about 1/3rd of the build cost so would only be looking to borrow the remainder. But I stil think the issue would be that the site at present is in my name, if I sell to her is a tax implication, if I give to her is atax implication, and she wont get a mortgage to build on something she doenst own.

Can anyone answer this question - how would I be affect tax wise. Say the house is worth 350k today, and I can show it worth 320k after this dev. If the site costs 70k to her, what tax woudl I pay?
 
Marry her?

... would she be comfortable getting a loan for a property that she does not own? Similarly, would you be happy gifting the site?

just a thought..
 
You should be able to get a mortgage in your joint names for the new build as your gf as her own disposable income.As you have savings also you will not need 92% LTV. The site will also have to go in to joint names. You could get a Deed drawn up by your solicitor to say that you own than 50% of the house as you owned the site. This will help if you ever need to go your separate ways. This should also cover any tax implications as you will not have gifted the site to her.
 
Callaghanj - not sure I fully understand. If the house stays in my name and we go to the solicitor about getting a deed drawn up for the site in both names, in essence she is getting 50% of a site (which has a market value) for free. Whilst this is fine with me, would there not be some tax / revenue issue with this?
 
Is there not enough empty houses out there already ?.Seriously,in the current climate i think it's madness to turn what must be a decent sized house with a good sized garden into 2 houses jammed together with little garden. I know someone who did this,now they have a pokey little garden and an empty house that's costing them money every month because the tenants moved out.
I was also looking at a house to buy,that was advertising the same thing house with outline pp to build another dwelling.I was only interested in the house as a family home and wanted the extra land (semi-rural aera) for veg,amimals. I now see it's come back with a much lower price and no advertisment of outline pp anymore.
You should think long and hard before you get involved in this.
 
Your solicitor will have to hive off the site( your existing mortgage company will have to give their consent as this will reduce the value of their security).

The site can then be held in jointly names but you would own it 100% benefically as you in effect paid for it. The deed of trust would be a document which confirms how much of it each of you own. This %'s will obviously change as the site is developed.

You will not have gifted anything to her and there should be no tax implications.
 
Coolhand - don't really get your point to be honest. I live in a house with a decent sized side garden which is of absolutely no use to me. It is in an area where all of the houses are <900 sq ft. This new house will be 800sw ft. There are terraced, this will be terraced. It's really not like I'm building a pokey little house in an area that is full of lots of big houses on acres! If we managed to rent one of these houses out, the extra money that brings could clear the 31 remaining years of the mortgage in 20!

As for thinking long and hard about it - we have. I fully appreciate the housing market isn't great at the moment, and prices will fall and rents will fall for quite a bit, but thats' no reason at all for the country to go into some sort of state of non movement.

If we build a house:
1) firstly it won't be completed for 18 months
2) It's in an area which is popular for renting - is near hospitals, the LUAS, loads of buses etc
3) We have no intentions of trying to sell it when it's finished
4) If we can't rent it out, we can afford the extra that this build will add to the existing mortgage

Appreciate the post, but to be honest don't really get what you're getting at. Regardless of the current housing market people will ALWAYS buy, sell, move, build etc and rightly so. Otherwise the country would stop!

CallaghanJ - thanks for that, get what you mean. Is an option we can look into

Cheers
 
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