Buyout after break up

Hi all,

I am looking for some advice on buying out my ex following our break up.

We bought a house nearly 3 years ago for €307K. We subsequently broke up.

My SSIA is due to mature next year. I have been paying the full whack for the whole time so am due about €20K minus some a few grand debts to clear. I am starting to look at my options.

If I buy her out I assume I get a new mortgage. Now there is no way I can afford the mortgage on the house based on my salary. What am wondering is how much does the appreciation of the value of the house affect this?

Say the house is now worth €420K. The mortgage is €280K. So thats

420-280 = 140/2 = 70 (ignoring fees/charges for simplicity).

So I need a mortgage of 280 + 70 = 350 to buy her out.

First off is this correct? And more to the point:

(1) Can I use the fact that I have been able to rent rooms for the last three years to increase my mortgage?

(2) Can I use the equity in the house to increase the mortgage? How doe sit work?

(3) Obviously I can use my SSIA to reduce the amount I need to borrow.

Any help or pointers would be really appreciated.

Your formula is correct although if you have been paying the mortgage/household bills since you split up then the split of equity should be adjusted to reflect this. The new mortgage will be based on your income and the majority of lenders take room rental into account. If you could post your basic salary and details of any other income (bonus, overtime, etc) I could give you a good idea of your maximum borrowing capacity.

Sarah

www.rea.ie

Thanks Sarah. I earn conservatively €40000 inc overtime. Bonus =

Rental income is 600 a month.

MentalNote said:

I am looking for some advice on buying out my ex following our break up.

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Ex partner or spouse?

ClubMan said:

Ex partner or spouse?

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Partner. However we originally only bought the house as an investment.

OK - so this is actually a Property Investment query?

ClubMan said:

OK - so this is actually a Property Investment query?

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I wouldn't think so. I live there now and want to continue living there if I can buy her out.

OK - that was not clear from the original query.

Hi Mental,

You will be liable for stamp duty on €210,000 of the purchase price as a 2nd time buyer if this was not your first home and you have not since bought any other houses.


You said this was was an investment so it looks like bad news

Hi MN. On your income, including room rental, you'd qualify for around €210,000 so unless there is a guarantor with a substantial income you'd probably be better off selling the property, splitting the proceeds fairly and buying again.

Sarah

www.rea.ie

Cheers Sarah. So I take it there is no way of using the equity that has build up to help the situation?

Well, you will have €70,000 (or more depending on what agreement you arrive at) plus the balance of your SSIA so that's taking you to the €300,000 ish mark. I guess it depends where you are looking to buy.

Sarah

www.rea.ie

skyblue said:

Hi Mental,

You will be liable for stamp duty on €210,000 of the purchase price as a 2nd time buyer if this was not your first home and you have not since bought any other houses.


You said this was was an investment so it looks like bad news

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Sorry to bump this after such a long time, but I have actually secured a mortgage thanks to wage increases and getting a guarantor. Now this post is interesting me. What is the SD liability of buying out the ex? I should clarify this is my first and only home (my ex has a second property so the investment was more on her part).

The original solicitor we used indicated there would no SD liability because Revenue tend not to bother with it in these circumstances and with property's less than 500K. My own solicitor suggested the same as what skyblue said.

Anyone got any actual experience of this?

From Revenue website re: stamp duty and first time buyers.


What is the position where a person, who had obtained first time buyer relief on the joint purchase of a house with another first time buyer, subsequently acquires the other joint owners interest in the house?

A person who obtained first time buyer relief on the purchase of an interest in a house would not be precluded from obtaining first time buyer relief on a subsequent purchase of another interest in the same house provided that person has not purchased another house or part of another house in the intervening period.

As I understand it you did not obtain f.t.b. relief when you first purchased and therefore will not qualify this time around. HOWEVER you should only be paying stamp duty ( if any) on the equity amount you are paying the ex. So if you are assuming liability for the entire mortgage then stamp duty may not be payable as half value of house less half outstanding mortgage is likley to come in under the threshold of E127K.

"The original solicitor we used indicated there would no SD liability because Revenue tend not to bother with it in these circumstances and with property's less than 500K."

Ask him to put this in writing............

mf

mf1 said:

What is the position where a person, who had obtained first time buyer relief on the joint purchase of a house with another first time buyer, subsequently acquires the other joint owners interest in the house?

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I was a first time buyer and she wasn't. As I recall the rules for SD at the time meant a FTB had to pay 3% on purchases over ~€292K. And she was liable for 5%. The total SD paid on the whole purchase was then 4%.

Camry said:

How do you plan to reach an agreement on the value of the property?

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We have had several valuations done, so hopefully we can agree this fairly amicably.

"I was a first time buyer and she wasn't. As I recall the rules for SD at the time meant a FTB had to pay 3% on purchases over ~€292K. And she was liable for 5%. The total SD paid on the whole purchase was then 4%."

No - there is no aggregation to get a mean rate of stamp duty. If you paid stamp duty, you will have paid it at the top rate.

mf

mf1 said:

No - there is no aggregation to get a mean rate of stamp duty. If you paid stamp duty, you will have paid it at the top rate.

mf

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I am nearly 100% sure that is not what happened, but I'd have to check the records. That aside the implication seems to be if I was classified as a first time buyer on the initial purchase I can get FTB status on the buy out. If I wasn't classed as a FTB on the intial purchase I will have to pay stamp duty on the buy out.

So basically have I given up any right to FTB status by joint owning, or could I be classed FTB if I bought a completely different property? Sounds bizarre to my non-accountant brain.

"If I wasn't classed as a FTB on the initial purchase I will have to pay stamp duty on the buy out.

So basically have I given up any right to FTB status by joint owning, or could I be classed FTB if I bought a completely different property? Sounds bizarre to my non-accountant brain."

You gave up any right to FTB status by joint owning. You can only be a Born Again FTB in limited circumstances and you don't appear to fit them. The only way you can not pay stamp duty on another property is if it is a new build or, if you check my post above, the stamp duty threshold is not exceeded.

mf

I bought a house with my (now ex) - we weren't married and both FTBs. He bought me out and about 12 months later, I got a call from revenue doing a stamp duty audit. I as ok as I bought another new build, but he got hit for stamp duty. Couldn't have happened to a nicer fella (!)