Tax implications of selling house and moving in with girlfriend

T

The_Banker

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I purchased my house in 2002. I paid roughly 65% down and got a mortgage for the remaining 35%. At present the house is now worth €530,000 and my mortgage is for just over €100,000 which gives me equity of €430,000.
My girlfriend bought her house last year with a 100% mortgage and paid €235,000 and it is at snag list stage. The second phase of the development is now coming on stream and and the asking price is €260,000 so she has €25,000 equity.
We are looking at selling one and living in the other when we get married next year. We were both first time buyers so I was wondering what the tax implications would be if I sold mine, took my profit (possibly to set up an enterprise I have in mind) and lived in my girlfriends house and we both jointly paid her mortgage.
Also, there is a possibility that we will both stay in our respective jobs in which case it would be easier to sell her house as my one is near where we both work.
If I rented my house I could get €1200 rent per month and my mortgage is €600 thus making another €600 profit but I doubt if I am cut out to be a landlord.
Any advice will be greatly received!
 
Re: Tax implecations of selling house and moving in with girlfriend

This sort of stuff has been covered many times in the past.
We are looking at selling one and living in the other when we get married next year. We were both first time buyers so I was wondering what the tax implications would be if I sold mine, took my profit (possibly to set up an enterprise I have in mind) and lived in my girlfriends house and we both jointly paid her mortgage.
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There is no tax on any gain arising from the sale of your PPR if it was never rented out. If you move in with your girlfriend then it's possible that she could avail of the rent a room scheme in respect of any rent that you pay and you could claim the private rented accommodation tax credit. However if you are contributing to the mortgage then that's a different matter. Also if she will be gifting or selling you part of the property then there could be tax implications. If your name is added to the deeds then you can also claim owner occupier mortgage interest tax relief.
If I rented my house I could get €1200 rent per month and my mortgage is €600 thus making another €600 profit but I doubt if I am cut out to be a landlord.
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If you do this then you will face a clawback of stamp duty as explained in many similar threads. You will also be liable for income tax on rental income and need to file returns etc. On the other hand while you would no longer qualify for owner occupier mortgage interest tax relief on the now investment property mortgage you could write off 100% of mortgage interest against rental income.

You should not drift into rental property investment by default. You should only do so if this is the most suitable investment for your needs at the moment.
 
Re: Tax implecations of selling house and moving in with girlfriend

The_Banker said:
If I rented my house I could get €1200 rent per month and my mortgage is €600 thus making another €600 profit but I doubt if I am cut out to be a landlord.
Click to expand...

Assumimg you paid FTB stamp duty rates when you purchased the property, you will have to pay the difference between the FTB rate and the full rate if you rent it out (other than under the rent a room scheme)within 5 years from the date of purchase, so don't forget to factor this into your calculations.

Post crossed with ClubMan's.
 
Re: Tax implecations of selling house and moving in with girlfriend

CLUBMAN/CCOVICH,
Many thanks for info. I have searched for threads relating to this topic but no joy. If you have any links, I would appreciate it.
Thank You.
 
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