Calculating CAT and CGT on property transfer - joint tenants

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Finewine13

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Good morning

Can you help advise on this tax issue, I'm unclear on certain areas. I'd like to know both the potential CGT and CAT implications on a property owned by joint tenants, if this property is fully transferred to myself.

My partner and I have split up and i'd like to take complete ownership of the house from him and buy him out at an agreed amount. ( €50k - Property and title transfer) All is very amicable and we are clear on all apart from the potential tax implications.

  • House purchased in 2007 for €286,000
  • Remaining mortgage €170,000
  • I'm getting a new mortgage with equity release to buy him out at agreed value of €50,000
  • Total new mortgage €225,000 (170k remaining mortgage and 50k buy out)
  • Current house value, approx €320,000
  • I've been paying mortgage past year or two and paid for any upkeep etc
Question 1: What is my potential exposure regarding CAT on this? Is all calculated at 50% (as in 50% of house purchase price - 50% current house value, or too simplistic)

Question 2: What is my ex partners potential exposure on CGT? It has been PPR, but i've been paying/managing all
Question 3: What value would the stamp duty i've to pay be calculated on?

Any help/advice/direction really appreciated!!
 
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Have you used a special font in composing the above post? I find it impossible to read on my screen. Would you mind please reformatting it to default?
 
Finewine13 said:
Question 1: What is my potential exposure regarding CAT on this? Is all calculated at 50% (as in 50% of house purchase price - 50% current house value, or too simplistic)
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You should be able to work it that there's zero if you've documented sole repayments.
House equity is 150k. Half is yours, you're buying the other half (75k) for 50k. Add in you've paid full mortgage, and you're not getting any 'gift'

Finewine13 said:
Question 2: What is my ex partners potential exposure on CGT? It has been PPR, but i've been paying/managing all
Click to expand...
None, if he's lived there the whole time as his PPR.

Finewine13 said:
Question 3: What value would the stamp duty i've to pay be calculated on?
Click to expand...
On 50% of the current market value.
 
RedOnion said:
You should be able to work it that there's zero if you've documented sole repayments.
House equity is 150k. Half is yours, you're buying the other half (75k) for 50k. Add in you've paid full mortgage, and you're not getting any 'gift'


None, if he's lived there the whole time as his PPR.


On 50% of the current market value.
Click to expand...
thanks a million for these replies and taking the time
 
Finewine13 said:
Question 3: What value would the stamp duty i've to pay be calculated on?
Click to expand...

RedOnion said:
On 50% of the current market value.
Click to expand...

I'm open to correction on this but given the particulars above, the stamp duty payable may be on less than 50% of the market value.

In this scenario, duty can be charged on the value of the equity or on cash consideration + liabilities assumed, with Revenue allowed to choose which basis of assessment to apply (in practice the one which yields the higher amount of tax).

In this situation:

The value of the property transferred is: €160k (€320k x 50%)

The debt assumed: €85,000 (€170k x 50%)

The cash being paid: €50,000

The equity: €75,000

The total consideration is €135,000 (€85k + €50k). Under section 41 SDCA, the duty is charged @ 1% on €135,000.

The source I am using are pages 7/8/9 of this Revenue guidance (specifically Example 2 on page 9 which I think mirrors your situation):


I'm sure your solicitor will have encountered lots of situations like yours and will be able to advise.
 
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