Buying Out before draw down of Mortage

[Nomay]

Hi
My girlfriend purchased an apartment with her sister off the plans 12 months ago. They are due to draw down the mortgage within the next three weeks. It would suit all parties if I could buy my girlfriends sister out but I am not sure how easy this is. Can anyone help answer the following:

The apartment has gone up in value to the tune of
€ 75000. I would be looking to take out a new mortgage with my girlfriend based on the market value so that I could pay her sister the profit she has made. Is this possible? Their current lender says no as it is not their apartment until draw down.

Would it be better to wait until mortgage is drawn down and then look to buy the sisters half?

Would my girlfriend's sister have to pay Capital Gains Tax on her profit?

The apartment is valued currently ay 460k. If my girlfriend had moved in with her sister and I then bought her sister out would stamp duty come into play, I have been advised yes by two solicitors but no by the Revenue Commissioner (as my 230k share would be under the 317500 threshhold)??

Can anyone advise on the best way to go about this??

Thanks.

 

[asdfg]

The apartment has gone up in value to the tune of
€ 75000. I would be looking to take out a new mortgage with my girlfriend based on the market value so that I could pay her sister the profit she has made. Is this possible? Their current lender says no as it is not their apartment until draw down.

I think this comes under "flipping the contract" See for AAM contributions and for google
My understanding is as follows
1. Some developers do not allow this. Check the contract. There is generally a clause in the contract. If the clause is there ask if the developer will allow what you are proposing. Get in writing from builders solicitor. If there is no clause in the contract, then you can do what you are proposing i.e. flip the contract.
2. You and you g/f will be first time buyers provided neither of you currently own or owned a property.
3. Your g/f sister will also remain a first time buyer in the future.
4. Your g/f is effectivelly bringing 37500 to the table. How is this to be protected if you split up.
5. You need to sign an agreement in the event of splitting up.

Would my girlfriend's sister have to pay Capital Gains Tax on her profit?

As the property was not hers or her PPR at any time I would think so.
She can deduct her portion of buying and selling expenses.

If my girlfriend had moved in with her sister and I then bought her sister out would stamp duty come into play, I have been advised yes by two solicitors but no by the Revenue Commissioner (as my 230k share would be under the 317500 threshhold)??

I would say that there is no stamp duty payable provided you are buying this as you PPR and not as an investment
Your g/f sisters will lose he first time buyers status in the future.
She may not be liable to CGT as she will have lived in the property if only for a few weeks (don't think there is a min time period)

 

[Nomay]

Re: Buying Out before draw down of Mortgage

Thanks for that reply, it is really helpful. I will need to sit down with the other two parties and discuss the pro's and con's of both options.

It is looking like the second option of waiting until sale goes through before buying into the property / buying g/f sister out makes more sense as there are less obstacles and time is quickly becoming an issue.

Initial enquiries suggest that the developer would not be keen on "flipping" and the last thing I want to do is jeopardise my girlfriends mortgage approval by changing things around.

My main concern with that option was that stamp duty but I agree with you that it should not apply.

Thanks again.