Sticky CGT situation? Help please?

I bought a house with my sister 3 years ago. I was out of the country at the time, so my name went on the mortgage, but NOT the title deeds. I've been paying the mortgage but now I want to get my name on the title deeds and am trying to do it without exposing myself to CGT.

House when bought 270k. Value Now 370k. Gain 100k I suppose.

Is there a way I can show the revenue that in substance I 50% own the house and always intended to be on the deeds. My 'trainee' solicitor reckons it would be treated as a chargeable transfer of half of the market value of the property (i.e. 185,000 less the 40k sibling exemption), therefore tax liable of 20% on 185k minus 40k, about 28 grand. I have NO intention of paying tax on something, when there is no transfer in substance (only legal form) - its just a question of putting my name officially on the deeds. I believe that the consideration being paid (as I'm on the mortgage deeds) is the same as the market value. Am I wrong?

Could anyone give me a pointer on how to progress this tax efficiently?

BrixnMortar said:

I bought a house with my sister 3 years ago. I was out of the country at the time, so my name went on the mortgage, but NOT the title deeds.

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Did your solicitor not apprise you of the risks of doing this? Did you obtain legal advice separate from your sister?

I've been paying the mortgage but now I want to get my name on the title deeds and am trying to do it without exposing myself to CGT.

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I don't understand how you, as opposed to your sister, would be exposed to CGT if you formalise the transfer of your share of the house now?

Is there a way I can show the revenue that in substance I 50% own the house and always intended to be on the deeds.

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I don't think so - legally you are not a part owner of the property even if you have been paying part of the mortgage. To regularise this situation will involve the transfer of part of the property to you, updating of the property deeds, and the triggering of CGT (and possibly stamp duty) liabilities.

My 'trainee' solicitor reckons it would be treated as a chargeable transfer of half of the market value of the property (i.e. 185,000 less the 40k sibling exemption), therefore tax liable of 20% on 185k minus 40k, about 28 grand.

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What do you mean by "trainee" solicitor? If you are not happy with the advice then seek alternative legal advice. However it looks correct to me.

I have NO intention of paying tax on something, when there is no transfer in substance (only legal form) - its just a question of putting my name officially on the deeds.

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Then the only way to legally avoid the relevant taxes may be not to put part of the property in your name and hope that the transfer of part of the eventual resale proceeds from your sister to you falls under the relevant sibling gift tax exemption threshold.

I believe that the consideration being paid (as I'm on the mortgage deeds) is the same as the market value. Am I wrong?

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I don't understand this - can you explain?

Could anyone give me a pointer on how to progress this tax efficiently?

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See my comment about about leaving well enough alone and using gift tax to transfer part of the eventual resale proceeds at some future date. For comprehensive and reliable tax advice you really should consult with an trained professional and not depend on message board amateurs like me!

As Clubman pointed out, you will be subject to Capital Acquisitions Tax, rather than CGT.

You will effectively be buying €185k worth of house for €135k, so your sister will be deemed as "gifting" you €50k. With your sibling exemption, you will pay virtually no CAT.

If it's your sisters home, she will not be subject to CGT on the disposal. If it is an investment property, she will have a gain of €50k and so will pay €10k CGT.

You will be subject to Stamp Duty on the purchase of half the house. But as it's less than €190k, you will probably be exempt. If you do have to pay stamp duty, it will be halved as it is between siblings.

I don't like the sound of your "trainee Solicitor". Get a proper solicitor and check out all the above information before doing any formal transfer.

Brendan

If you are dealing with a trainee solicitor and you are not happy with their advice, the next time you are going in, specifically make an appointment with the boss. It sounds to me that you were always the beneficial owner of half the property regardless of the fact that your name was not on the title deeds- so ask your solicitor about doing a deed of trust with your ssister, whereby you both declare that although the property was put in one name, you were both the beneficial owners, and you provided half the purchase monies etc. Watch out for any stamp duty implications where for eg your sister was a FTB and you were not, and she availed of the FTB relief.

If you enter into a deed of trust you should be able to avoid any CAT and CGT problems.