Will first-time buyer status be lost even if nothing was paid on a UK mortgage?

Q&A: Dominic Coyle answers your personal finance questions

Help to buy? An estate agent’s shop window in Dublin. Photograph:   Brian Lawless/PA Wire

Help to buy? An estate agent’s shop window in Dublin. Photograph: Brian Lawless/PA Wire

 

My husband bought a house with his ex-partner six years ago. He moved out two months after purchase but left the mortgage in his name for three years. He never made any financial contribution to the mortgage. The property is in the UK, where we both resided until last year. Are we eligible as first-time buyers? I have never owned a property.

Ms MC, email

For the sake of a couple of months, it appears neither of you will be eligible for the Help-to-Buy scheme as first-time buyers. There is, however, just a small chance it could work for you.

The rules regarding first-time buyers are black and white, and from the Revenue’s viewpoint, especially in relation to foreign property, the onus is on you to police yourselves on this matter.

You yourself have never owned a property, and if you were single you would be considered a first-time buyer and would be entitled to apply for a tax rebate under the Help-to-Buy scheme to assist you in paying the deposit.

However, buyers are treated as a group. If any buyer of a property has previously owned a property, all the buyers in that transaction lose their first-time status.

As your husband has owned a property, you won’t be considered first-time buyers. The fact that it was in the UK does not affect things – any ownership worldwide precludes him (and you) from being considered first-time buyers here.

In the particular circumstances, it is most unfortunate. Effectively, you lose out on up to €20,000 for the sake of a couple of months.

The fact that he didn’t contribute financially to the mortgage, either when he was still in the relationship or in the following years when his name was still on the mortgage, doesn’t change things, unfortunately. What does matter is whether he has been listed as an owner and, with his name on the mortgage documents for three years, I assume his name was also on the original deeds of purchase.

It is strange, however, that his then partner would allow him to share ownership of a property even though he never contributed to the mortgage. It is also surprising that she would allow him take his name off the mortgage without any financial settlement. After all, I assume they bought as a couple, and yet his former partner has ended up paying the full bill. While his name was on the mortgage, she might have had some leverage over him. Allowing him to remove his name gratis is certainly gracious of her.

But if it turns out that he was never named on the title deeds of the property as an owner, it is possible that you would be eligible as first-time buyers.

People do sometimes wonder how Revenue will know, in circumstances such as these, that someone had a property in another country, especially when it was for such a short time. And in the old days, you would have been right in thinking that they might well never find out. However, co-operation between tax jurisdictions has improved dramatically in recent years as tax authorities look to clamp down on evasion and money-laundering.

In addition, when you apply for first-time buyer status, you attest in the application form that you have never previously owned a property. The onus is very much on you. If you fib and the Revenue finds out, it will undoubtedly claw back any benefit you have received – at a minimum.

Send your queries to Dominic Coyle, Q&A, The Irish Times, 24-28 Tara Street, Dublin 2, or by email to dcoyle@irishtimes.com. This column is a reader service and is not intended to replace professional advice.

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