Will my son be hit for tax after break-up?
Your questions answered
Q My son and his partner, who have three children, jointly purchased the family home in 2005 and were cohabiting together there until 2015. They have a signed cohabitant's agreement - including provision for a break-up. They broke up in 2015.
As the separation is amicable, they have agreed that my son's partner will remain in the family home with the three children. My son provided €250,000 towards the joint purchase of the family home and his partner, who owns an investment property with net equity of around €200,000, is willing to transfer this to my son in line with the cohabitant's agreement. He then will relinquish his interest in the family home. As they are not married nor in a civil relationship, the Revenue Commissioners refused tax relief on the transfer of the beneficial interest in the investment property to my son - so it now looks like my son faces a Capital Acquisitions Tax (CAT) bill on the "gift" of the investment property. The plan is that my son will take over responsibility for the mortgage on the investment property whilst his former partner will be responsible for the family home mortgage. Is any tax relief or exemption available here - as the absence of such relief seems unfair and inequitable to my son? He currently resides in the investment property as he does not own any other property and wishes the family home to remain intact for the benefit of the children.
Castleknock, Dublin 15
The Civil Partnership and Certain Rights and Obligations of Cohabitants Act 2010 allows cohabiting couples to enter into cohabitant's agreements to work out what will happen in the event that their relationship ends by death or otherwise. However, such arrangements do not get any preferential tax treatment - and so gift tax and stamp duty may apply to the transfer of properties between cohabitants.
If a claim is made under the 2010 Act and orders are made by a court under that Act, no gift tax or stamp duty is payable. Such a court order could be that one cohabitant transfer a property to the other. For the tax exemption to apply, claims must be made within the requisite period - that is, two years from the termination of the relationship.
Sharing bills with ex
Q My husband and I are getting separated. Most of the household bills - including the phone, electricity, television and heating - are in my name. Payment for these bills is therefore taken out of my bank account - and up until now, my husband has always paid me his share of the bills. We have three young children. My husband is now moving out of the family home and we are not on speaking terms. He is insisting that he doesn't have to pay his share of the household bills anymore given that he will no longer be living in the home. However, those household bills aren't just arising from me - our children also live in the home. What are my rights here and what's the best way of resolving this? Do I need to get a court order to get my husband to pay his share of the bills?
Family finances invariably need to be reorganised on separation when one spouse leaves the family home. While together, your husband helped to pay the bills. However, he has now said he will not continue to do so.
Your husband has a responsibility to support his children and if he does not help pay the bills, he should pay you maintenance or child support so that you can pay the bills yourself. The amount of maintenance will depend on his earnings and your earnings. He may have to pay rent if he moves out of the family home and he will also have his own bills to pay. Try to agree a figure that is fair to both of you. The Family Mediation Service (which is a free service) can help couples try to reach agreement. You can check this out at www.legalaidboard.ie. If you cannot reach agreement, an application can be made to court and the judge will determine the amount to be paid.
Joint mortgage nightmare
Q About four years ago, my ex-partner left me - and he also moved out of an apartment we had bought together at the height of the boom. We lived in that property together for about seven years - and we have two young children. My ex has refused to contribute towards the mortgage since he moved out. I managed to cover the mortgage in full for a while but as I was reduced to a part-time working arrangement a couple of years ago, I fell into mortgage arrears shortly after that. I restructured the mortgage as my ex wouldn't help with the repayments - and he ignored letters from the bank and myself. My son and I have since moved back in with my parents - as I had planned to rent out the apartment to tenants so that the mortgage would be paid. However, when I told my ex of my plans, he said he would not allow tenants into the apartment. He demanded instead that the apartment be sold. As we are still in negative equity, selling the apartment would not be a good idea - a sale in the current market would not repay the outstanding mortgage. Can my ex force tenants out - or as co-owner, am I entitled to make a decision on the apartment when the other owner is not co-operating on the mortgage?
Balgriffin, Dublin 15
This is a situation that many couples, married or cohabiting, find themselves in.
The mortgage is a joint (and several) obligation and both of you are responsible for the full amount. Equally both you and your ex-partner are joint owners of the apartment and have equal rights. You need to agree what is to be done with it - that is, whether to let it, sell it, or use it. The advantage of letting it is that rent (after tax) will help pay the monthly mortgage. This will keep you on track with the bank and keep your credit rating in good order. If you sell it and the proceeds of sale do not clear the mortgage in full, you will still both owe the full balance due to the bank. This debt may negatively affect your financial profile in the future.
Using it is the other option - and you have used the property up to now and paid the mortgage. If your ex-partner wished to use it himself and to pay the mortgage, that could be another solution. Alternatively, if he does not wish to use it himself, it makes sense to let it and use the rent to pay the mortgage for another period of time - perhaps until the value of the apartment is the same as the mortgage amount.
The Family Mediation Service helps separated couples to sort out these problems. If the problems cannot be resolved by agreement, you will have to make an application to court. The court route would not be straightforward as you are not married to each other. Furthermore, as you have been separated for over two years, you cannot apply to the court under the Civil Partnership and Certain Rights and Obligations of Cohabitants Act 2010.
Whichever decision you make, you should do so as soon as possible because if the monthly mortgage repayments are not being paid, arrears will accrue and this only increases the debt to the bank.
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