Can my partner pay off my mortgage without me being taxed.

C

Curlywurly71

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My partner has received a lump sum through inheritance. He has offered to pay off the remaining mortgage 144k..
Our home and mortgage is in my name (I'd purchased before we met, also we're not married). I have been in ill health the past decade and have had my work hours reduced by 50%, so understandably this would be of great benifit.
I'd be grateful if someone could advise if I'd be subject to a large tax bill if he did so. T.I.A.
 
If you get a gift of €144k from an unrelated person, about €19k will be tax-free assuming you got no such gifts or inheritances before.

So you would pay CAT (Gift Tax) of 33% of €144k - €19k = €125k @ 33% = €41k.

So to pay off your mortgage, he would have to pay the €41k CAT as well.
Then you would pay 33% CAT on the €41k or another €14k
 
To avoid this tax, why does he not buy a share in your house?

If the house is worth €288k , he can buy 50% of it for €144k.

That would seem to be the best solution from a few points of view.

1) It is tax-efficient.
2) If you split up, he owns a share in the house and hasn't just given away €144k.

If you do this, make sure to put it in writing.

Brendan
 
An alternative to consider

1) He gives you a gift of €19k this year - this is exempt from tax.
2) He gives you gifts of €3k every year - small gifts are exempt from gift tax.
3) He pays you €14k rent under the Rent a Room Scheme every year.

I think it would be ok for him to lend you the balance in the meantime.

Brendan
 
Brendan Burgess said:
Hi Tommy

Isn't it a better idea that giving her a gift?
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Is it?
Brendan Burgess said:
I presume that it is perfectly legit. to take advantage of the scheme?
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It may well be perfectly legit, but I suspect Revenue might conclude it's a scam to contrive entitlement to the rent tax credit.

If after 3 or 4 years they review the case and rule that there is no entitlement to avail of the rent a room scheme, the OPs partner could be deemed as having received taxable rental income and could be facing a retrospective income tax bill.
 
T McGibney said:
Is it?

It may well be perfectly legit, but I suspect Revenue might conclude it's a scam to contrive entitlement to the rent tax credit.

If after 3 or 4 years they review the case and rule that there is no entitlement to avail of the rent a room scheme, the OPs partner could be deemed as having received taxable rental income and could be facing a retrospective income tax bill.
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Looking through the list of exclusions and I cant see anything that is relevant here.

What conditions must be met?

This page oulines the criteria which are needed for the relief.
www.revenue.ie www.revenue.ie
 
planck said:
This thread is yet another example of the discrimination against single people in the tax code in relation to gifts and inheritances.
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The CAT code in particular is riven with discrimination, worsened over time by the failure to index tax exempt thresholds.

The UK doesn't even have gift tax. Here in comparison, someone paying for the honeymoon of their son or daughter can land them and their new spouse with a CAT bill.
 
T McGibney said:
The UK doesn't even have gift tax. Here in comparison, someone paying for the honeymoon of their son or daughter can land them and their new spouse with a CAT bill.
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They have their fair share of convoluted rules on gifts in the UK, including some 7 year faff with tapering levels of inheritance tax depending on when the gift was given. And I think that particular rule is even more restrictive that ours.

There are also specific schemes re: giving money for weddings depending on whether the recipient is your daughter or your great-grand-nephew twice removed.
 
T McGibney said:
It may well be perfectly legit, but I suspect Revenue might conclude it's a scam to contrive entitlement to the rent tax credit.
Click to expand...
Are you ex-Revenue? The Revenue put in a clause about related people which I will check and there was no basis for it.
 
arbitron said:
They have their fair share of convoluted rules on gifts in the UK, including some 7 year faff with tapering levels of inheritance tax depending on when the gift was given. And I think that particular rule is even more restrictive that ours.

There are also specific schemes re: giving money for weddings depending on whether the recipient is your daughter or your great-grand-nephew twice removed.
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Gift Tax doesn't exist in the UK. Inheritance Tax (IHT) does, and there are perverse rules which punish donees by imposing IHT where a donor dies within 7 years of making a gift. It is possible to insure against this possibility, but in my book it's crazy to punish people for suffering unanticipated bereavement.

There are political moves afoot to scrap IHT and eliminate this anomaly.

The Irish system of taxing both gifts and inheritances also serves to punish those who suffer tragedy within their families, in particular those who lose both parents at a young age
 
WizardDr said:
Are you ex-Revenue?
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No. Why do you ask?
WizardDr said:
The Revenue put in a clause about related people which I will check and there was no basis for it.
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The Tax and Duty Manual mentions a specific prohibition against claiming rent a room in relation to rent paid by a child.

It doesn't address the issue of rent paid by a cohabitant. Given that the existence of the new rent credit now presents an apparent opportunity for a cohabitant to claim the credit in respect of rent paid within a household to their cohabiting partner, this may well change.
 
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