Girlfriend Buying Half the House

N

nhainsworth

Guest
Hi Guys
Myself and my brother bought a house 3 years ago as first time buyers,He now wants to buy a house with his girlfriend and my girlfriend wants to buy his share.

We would like to take my brother off the mortgage and add her to the mortgage. Then re-mortgage and use them funds to pay for her half of the house. We would also like to take my brother off the deeds and add her to the deeds. She has never had a mortgage before (first time buyer). Will we have to pay any tax on the payment to my brother. Are my Girlfriend and I entitled to First time buyers TRS1 on the mortgage??
 
Re: Girlfrend Buying Half the House

santoro said:
Since you previously bought with your brother you are no longer considered a FTB.
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Wrong. For TRS purposes you are a first time buyer for seven years from date of first purchase. After this seven years TRS is reduced to normal rates.

From Revenue website
"The higher limits for first-time buyers, apply for the tax year in which the mortgage is taken out plus six subsequent tax years"
 
Hi thanks for the input but i understand all about TRS1 as i have got it for the last 3 years. I just need to know if we were to go ahead with what i stated above would this be considered a new purchase??
 
Well your period of preferential "FTB" owner occupier mortgage interest tax relief does not reset on purchasing a new home if that's what you mean? If you have used up 3 (?) years of this period then you have 4 left.
 
"I just need to know if we were to go ahead with what i stated above would this be considered a new purchase??"

Its actually simple enough. Agree a value of the house with your brother. Split it in half and deduct one half of the outstanding mortgage. That is what his share is worth.

If your g/f gives him more or less than market value then Revenue may consider it a Gift and so Gift tax might be payable.

If this is your brothers main residence i.e. Principal Private Residence, then he pays no CGT on the disposal of his one half share to g/f.

As g/f is a FTB she pays no stamp duty on the purchase of the property.

How to finance? Either join the current lender into the transaction and they release your brother from the mortgage and join g/f and the Deed also transfers ownership.

Its probably easier just for you and g/f to apply for a mortgage together which will repay the current mortgage and raise the finance to buy out his share. But consider who should be repaying any aspect of the mortgage that relates to her paying brother.

mf
 
"Its probably easier just for you and g/f to apply for a mortgage together which will repay the current mortgage and raise the finance to buy out his share. But consider who should be repaying any aspect of the mortgage that relates to her paying brother."

So if i was to go down this route, i would still have 4 years left on my FTB TRS1 and my G/F would have the full 7 years? We would only have to possibly pay Gift Tax even though we will be paying the full market value to my brother who is Principle Private Residence.
 
I was in a similiar situation this time last year. My boyfriend and his brother co-owned a house and I bought out the brother's share. We got three valuations and took the average price of the three. We then took out a new joint mortgage in order to raise the finance needed to pay off my boyfriend's share of the old mortgage and to give the brother his share of the agreed house value (he then paid off his own share of the old mortgage from this amount).

For TRS purposes, I am considered a first time buyer while my boyfriend has one year left to run on his FTB status. For stamp duty purposes, I was considered to be purchasing half the value of the house, which came under the Stamp duty threshold and there were no issues with gift tax.
 
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