Can't raise funds for 2nd House

G

grotty

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Hi Folks,

I have a 4 bed house worth in the region of 340K, the mortgage remaining around 273K.

Speaking with letting agents, I could cover mortgage with about €150 to spare each month if I let the whole house out.

I want to keep existing house as a pension/fall back, not to make profit from it.(it would be great, but I'm realistic)

I want to buy a house in a better location with my partner. But we seem to be hitting a brick wall.

House we are interested in is around 430K, I think we could get it for around the 400K mark. Partner is a FTB but because I am not, there seems to be stamp duty on this of around 30K. So it looks like we need to come up with at least 70K.

Partner can't get mortgage for this by herself; she would only get in the region of 260K.

Can anyone give us any tips on how we can negate the Stamp Duty requirements? Or if there is no way around the SD, how do people fund the SD?

We have join savings of around 60K, but I don't want to put this all into the SD/Deposit as we would have absolutely no fall back fund if this was the case.

Any advice gratefully accepted
Grotty
 
1. Stamp duty will be payable if you buy or in any way fund the purchase of the second property.
2. There is no (legal) way around it. I'm sure there are lots of illegal ways around it.
3. It may be that you cannot afford to do what you want to do. You need to talk to (a) lender(s) to see if they would be willing to lend to you on the basis of the two properties. You may find that you cannot borrow enough money to hold onto the first property and still buy the second one. You may have to sell the first property if you want the second property. You may not be able to sell the first property.
4. People fund their stamp duty liability with savings.

I think the market has changed remarkably in the last two years. I think people are going to have to (re)discover the notion of saving for rather than borrowing for purchases.

mf
 
Wouldn't be mad on holding onto a house as a pension. It's a very geared exposure.
You want the following
1. To live somewhere nicer
2. To put away money for the future

You're best off selling the old place, buying the new one and putting away whatever you can affort into a pension plan where your contributions are tax deductable
 
Also - a regular pension is presumably much more tax efficient than a property holding.
 
within29 said:
Is she on the current hse title. If not, put her on title & both on mortgage.
Click to expand...


This does not work and is a fraud on the Revenue. Revenue have made it quite clear that someone may not avail of First Time Buyer Stamp Duty relief if they are getting any assistance with Mortgage repayments. They have carried out a high profile random audit of circumstances where people fraudulently claimed to be FTB's.

Like I said before

2. There is no (legal) way around it. I'm sure there are lots of illegal ways around it.

mf
 
Thanks for the feedback, but Im worried about the notion of being part of fraud. What we had settled on today was for her to buy a house in her name, with her mortgage. I would contribute half the depoisit(not officially), and would pay half the half the mortgage. I actually presumed this would be legal and above board, as the money would be going from her account to the bank. The contract would be between her and the lending agent. SO based on MFs comment I would be breaking the law by entering into this sort of agreement?
 
From the revenue website:


What is the position where the purchase monies are not provided entirely by the first time buyer?

To qualify for the relief the entirety of the purchase monies, including any borrowings, must be provided by the first time buyer. Any person, who provides part of the purchase monies or who is a party to any borrowings relating to such purchase, is also regarded as a buyer of the house and the relief will not be available unless that other person is also a first time buyer.
The basis for this treatment is that, in such circumstances, the house is held for the person providing the monies used in the purchase of the house by way of a resulting trust presumed in favour of that person. This treatment applies whether or not all the parties providing the purchase monies, or all the parties to any borrowings, are actually named in the deed of transfer.
Notwithstanding this treatment, to take account of particular situations, Revenue is prepared to accept that a child, who is a first time buyer, will not be precluded from claiming first time buyer relief where a parent acts as a co-mortgagor in the following circumstances:

  • The transfer of the house is taken in the name of the child.
  • It is the intention of both the child and the parent that the parent is not to take a beneficial interest in the house.
  • The parent 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 parent will be contributing to the repayment of the mortgage in the normal course.
Where the four conditions set out above are satisfied, Revenue will treat the parent as effectively acting in the role of guarantor for the loan.
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.
The relief from stamp duty is intended to benefit only genuine first time buyers and Revenue will continue to use our audit programme to ensure that there is no abuse of the relief.





You could risk it if your solicitor and the bank agreed but you could be caught.
 
You could risk it if your solicitor and the bank agreed but you could be caught.
Reply With Quote

The solicitor cannot,will not and should not be a party to Fraud on the Revenue. They will have an exposure to Revenue if they do. There is nothing in it but trouble for anyone who goes this road.

mf
 
can i butt in and ask a question

if a ftb was to get a loan from a person ( not a financial institution) and used this towards a house purchase would they still lose ftb status and have to pay sd?
 
You can get a loan from another person in certain circumstances. From the Revenue site.

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.
The relief from stamp duty is intended to benefit only genuine first time buyers and Revenue will continue to use our audit programme to ensure that there is no abuse of the relief.



I would assume that the person giving the loan could not live in the property.

"The solicitor cannot,will not and should not be a party to Fraud on the Revenue. They will have an exposure to Revenue if they do. There is nothing in it but trouble for anyone who goes this road."

Stranger things have happened and I've no doubt some solicitors have defrauded the revenue in the past. People break the law even though they shouldn't!
 
Why not sell the place instead of the greedy approach that caused the mess we're now in of people thinking they were entitled to two houses and pricing people out of the market that only wanted a place to live.
Sell the place, let somelse 'get on the ladder', and contibute to a pension scheme like the rest of us have to.
"Can't raise funds for 2nd House"... poor you... thankfully for yourself you're not posting "can't afford a house"

G'luck with that.:mad:



.
 
Will you not be putting yourself in the position of having no legal rights over the house? Sounds mad to me.
 
HOC: 1st: I already have a conventional pension, which I don't have any administration input into. Not sure if you've noticed, but billions have been knocked off the value of pensions. That isn't filling me with confidence. I do know that equities etc have out-performed other forms of investment in the past, but as they say "Past performance is not necessarily indicative of future results", so maybe putting all my hopes for the future into one basket, isn't the brightest idea.


2nd: "Greedy Approach", - You're obviously not a fan of Capitalism, I am, I won't try to convert you. - " let somelse 'get on the ladder'" - are you having a laugh???? Houses aren't selling well at the moment, and of the people who aren't yet on the ladder, most are adopting a "wait and see" policy, a lot of people I've been talking to, are mentioning 2010 as the year they will make a purchase, as for the people in the FTB bracket, that are/were actually searching, sounds like a lot of them are hanging back to see what the budget brings. So rest assured no-one will be homeless due to my "greed"


Moneygrower: That is the fear at the moment; I genuinely thought it would be as simple as one person being on the deeds/mortgage etc, and me drawing up a contract with my solicitor outlining my agreement with my Girlfriend as to my rights & responsibilities on the property. This approach now looks to be a none runner based on the legal issues as Raised by MF1 . Looks like Joint ownership with SD is the way forward, more expensive but less complex and who knows if the SD reform they are talking about does get delivered, maybe it be a bit more achievable!

Thanks for all your help so far.
 
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