Can Partner provide deposit for mortgage that I am taking out in my name.

B

brokeagain

Registered User
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Hi,

My parner is thinking of getting a loan for a deposit and I am going to apply for a mortgage on my name using this money as a deposit.

I am a first time buyer and he isn't so this is how we are going to avoid stamp duty.

We are getting married next year so whats mine is his and all that.

I am just wondering how the lenders deal with this type of situation? Is it frowned upon? I will be making the mortgage repayments from my account and I can get enough of a mortgage based on my salary.

Thanks for your advice..
 
Sorry to tell you, but it's tax evasion. If any of the source of funds is from your partner it's a joint transaction and you're liable for stamp duty. That's all there is to it. See [broken link removed]
 
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Is it a gift? Will she sign a gift letter saying she will have no beneficial interest in the property?
 
NorfBank said:
Is it a gift? Will she sign a gift letter saying she will have no beneficial interest in the property?
Click to expand...
Partner is spouse-to-be according to OP.

Revenue has this to say (see next question at link provided - I've extracted the relevant text here for ease of reference):

The section also provides that a "gift" shall be deemed not to be unconditional and a "loan" shall be deemed not to be bona fide where the donor/lender concerned:
  • is not a party to the instrument giving effect to the purchase of the dwellinghouse or the interest in the dwellinghouse and
  • intends to, or does, occupy the dwellinghouse with the purchaser as a principal place of residence or
  • there is an understanding that the dwellinghouse, or an interest in same, will be transferred to the donor or lender at any time following the purchase.
[...]
The measure applies to instruments executed on or after 31 January 2008.
 
Why would he have to do this? A lender looks for a statment of an account with the deposit in it. I have never heard of written declarations!

What if he bought a car off me and transferred the money to my account...not the sme but you get the idea?
 
I just read this on the revenue website:

Consistent with the above approach, Revenue will also be prepared to treat persons other than parents of the first time buyer, who satisfy similar conditions to those set out above, as effectively acting in the role of guarantor for the loan. Their involvement in that capacity will not be treated by Revenue as precluding a claim to first time buyer relief. In such circumstances the conditions are as follows:
  • The transfer of the house is taken in the name of the first time buyer.
  • It is the intention of both the first time buyer and the other person that the other person is not to take a beneficial interest in the house.
  • The other person has been joined into the mortgage solely at the request of the lending institution for the purpose of providing additional security for the monies being advanced for the purchase.
  • It is not intended that the other person will be contributing to the repayment of the mortgage in the normal course.
Correct me if I cam wrong but can't my partner act as a guarantor for me if the house is in my name??
 
did you actually read the text from revenue that you quoted?
how will your partner not have a beneficial interest in the house? will they not be paying any mortgage repayments?
 
brokeagain said:
Correct me if I cam wrong but can't my partner act as a guarantor for me if the house is in my name??
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No, he can't.

One of the conditions for a guarantor's not affecting an FTB's status is that
"The other person has been joined into the mortgage solely at the request of the lending institution for the purpose of providing additional security for the monies being advanced for the purchase."
[emphasis added].

Since it's for the purchase of a property in which he intends to live with you, acting as guarantor and having you as the sole owner will not avoid the stamp duty liability.

Furthermore, as already pointed out, your partner is a source of funds, by means of gift (see section 6 of the same link). That means that if he intends to occupy the same house it is not unconditional, and therefore not a bona fide first time buyer transaction.

There is no grey area here: if he lives in the house with you and provides any funds in any way - whether by "gift" towards deposit, or later by way of mortgage payment - it is not a purchase which qualifies for stamp duty exemption.

Your only legal way to avoid paying stamp duty (without living apart for a very protracted period) is to purchase a new house under the stamp duty exemption square footage limits.
 
dereko1969 said:
did you actually read the text from revenue that you quoted?
how will your partner not have a beneficial interest in the house? will they not be paying any mortgage repayments?
Click to expand...

No he won't. This house will be my house. He has purchased a property already but it is not convenient to where we work now. THe hous can't be rented either so he is paying mortgage on it.
 
Dreamerb said:
No, he can't.

Your only legal way to avoid paying stamp duty (without living apart for a very protracted period) is to purchase a new house under the stamp duty exemption square footage limits.
Click to expand...

Is that with us both on the mortgage? What is max square footage?
 
Yes, and I just realised it's now described in square metres - 125 sq.m. (= approx 1345 square feet).
 
Thanks for your replies. I guess it is back to the drawing board. I have savings but I need them for legal fees, furniture etc.

Hopefully some more rent to buy schemes will start to appear!
 
Does this logic stack up?

Tax evasion is surely a legal concept. Intending to marry someone is not a legal committment.

Say you get an unconditional gift of €25k from a person.

Then you buy a house using this as a deposit.

If you rent a room (€800pm under the rent a room scheme) to this person I don't think it counts as their principal place of residence.

If you happen to marry this person next year I don't believe you've done anything to evade tax
 
@DerKaiser:
The gift is immediately not unconditional because the person intends to live there. He'd better be out when Revenue comes to check on the transaction.

Seriously: your model is tax evasion and revenue will treat it as such.

Besides, what of the OP's poor misfortunate intended? What if they live together in "her" new house and discover they're just not meant for each other after all? He sods off, down by a house deposit and with no intention of pursuing her for any portion of the house? Say, a "buyout" from the house he doesn't have any beneficial interest in?
 
Dreamerb said:
@DerKaiser:
The gift is immediately not unconditional because the person intends to live there. He'd better be out when Revenue comes to check on the transaction
Seriously: your model is tax evasion and revenue will treat it as such.
Click to expand...

Does a place you rent legally constitute a 'Principal place of residence'?


That's the big risk
 
Bottom line, I still think it would be difficult to prove evasion on the basis of the intended living arrangements of two non related people.

I notice that the wording of the gift arrangement is based on the 2008 finance act coming in to force on 31/01/2008, is there anywhere the previous wording can be found?
 
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