Taking name off Mortgage - Tax implication?

darwhi24

New Member
Messages
6
Hi,

Any advice welcome.

My friend and I bought an apartment in 2004.
Cost €295,000.
Deposit €29500. Paid half each.

We both live there, it is our only property, and have shared the mortgage 50/50.

I now want to get my own place with my girlfriend and sell this apartment.
My friend has suggested I take my name off the mortgage & deeds, and he will keep the place.
The bank has agreed to this.

The apartment is today worth €230,000 .
We have an outstanding mortgage balance of €180,000.
My friend suggests he gives me €25,000 as this is how much I would get for my half if we sold it the normal way.
I am fine with this.

My question is will I be liable for any tax on this €25,000?
I know if we sold it normally I wouldnt as the apartment is still worth less than what we paid for it.
However, as I am simply removing my name from the deeds & mortgage, I am concerned revenue will consider this €25,000 as some sort of gift.

Many thanks for your time.

D.
 

luckystar

Frequent Poster
Messages
143
I'm assuming there will still have to be a 'sale' as in you'll need a solicitor for deeds etc. Is there a tracker mortgage? Will your friend be able to keep it? You'll be losing any rights over it. Just a few things to consider. I wouldn't be concerned about revenue. You are selling your interest in the property
 

darwhi24

New Member
Messages
6
I'm assuming there will still have to be a 'sale' as in you'll need a solicitor for deeds etc. Is there a tracker mortgage? Will your friend be able to keep it? You'll be losing any rights over it. Just a few things to consider. I wouldn't be concerned about revenue. You are selling your interest in the property
Thanks for the reply.

Yes he is keeping it - the bank have ok’d this.
No tracker involved.
I am happy to move on from it - I need to in order to buy my own place.

I just thought with him putting €25,000 into my bank account I would best be sure that I wont be hit with a tax bill.

*For anyone else doing this, I discovered that once you take your name off a property, it disappears from your credit history with the ICB, and can affect your credit score. So if you have a stellar repayment record it vanishes. Make sure you get your credit report sent to you before it disappears - at least you have it then to show new lenders should you require.

D.
 

rob oyle

Frequent Poster
Messages
585
I see no issue with this - you're selling your half of the property and using the proceeds to effectively pay off your share of the mortgage. Your friend is effectively getting a mortgage for €90k and using €25k of his/her own funds to pay the balance. Sounds like a clean arrangement, as long as you're happy and perhaps have legal advice to review everything this sounds good for all concerned.
 

torblednam

Frequent Poster
Messages
430
From a tax point of view, what’s relevant is what you are disposing of, and at what value, versus what you bought at day one.

You are disposing if a half share of an apartment worth 230k - a disposal of €115k.

This needs to be compared to what you bought at day one,a half share in an apartment at a cost of €X (plus your share of stamp duty, legal costs etc).

That will give you a gain or loss.

And then you’re entitled to relief from CGT for any periods that you occupied the property as your sole or main residence (PPR relief).
 

NoRegretsCoyote

Frequent Poster
Messages
792
The valuation seems low for an apartment bought in 2004.

A sale well below market value could be viewed as a gift.

Make sure you have evidence of similar units in the same development selling recently at similar prices.
 

RedOnion

Frequent Poster
Messages
3,290
*For anyone else doing this, I discovered that once you take your name off a property, it disappears from your credit history with the ICB, and can affect your credit score
Who has told you this?
It's the first time I've heard it.
 

RedOnion

Frequent Poster
Messages
3,290
To answer original question, as @torblednam explained calculation above, since you're making a capital loss there's no tax implications for you. Because you've lived in the apartment the whole time you've owned it, the losses can't be carried forward to offset future gains.

Your friend will have to pay stamp duty on the share he's buying from you (1% of market value), and you'll need to engage a solicitor.
 

RedOnion

Frequent Poster
Messages
3,290
Ah, understood. BOI keep the same account, and just remove a name from it. The account still has a history in ICB, but it's now only associated with 1 name.
Some others treat it as a 'remortgage' and open a new account, so the history of the old one remains. If it was a normal full repayment the history would remain.
 

darwhi24

New Member
Messages
6
The valuation seems low for an apartment bought in 2004.

A sale well below market value could be viewed as a gift.

Make sure you have evidence of similar units in the same development selling recently at similar prices.

Unfortunately that is the value. It never fully recovered.
Am I right in saying that once I don’t recieve any more than my half of the cost at purchase €295,000, less the current mortgage, €180,000, which would be €115,000 / 2 = €57500 then there are no tax implications?x
 

darwhi24

New Member
Messages
6
Ah, understood. BOI keep the same account, and just remove a name from it. The account still has a history in ICB, but it's now only associated with 1 name.
Some others treat it as a 'remortgage' and open a new account, so the history of the old one remains. If it was a normal full repayment the history would remain.
I know its not ideal for the person taking their name off! A good credit history is worth gold.

D.
 

NoRegretsCoyote

Frequent Poster
Messages
792
Unfortunately that is the value. It never fully recovered.
Am I right in saying that once I don’t recieve any more than my half of the cost at purchase €295,000, less the current mortgage, €180,000, which would be €115,000 / 2 = €57500 then there are no tax implications?x
@RedOnion has answered the CGT question.

My concern was that a below market price sale would be treated as a gift for CAT purposes. But if it's market price then nothing to worry about on that front.
 

luckystar

Frequent Poster
Messages
143
Re: ICB. Might be worth getting a copy before your name is removed. This might help an application
 
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