Your property questions answered
Helping a cousin out
Five years ago I helped out my cousin when she was buying an apartment. I was prepared to go guarantor on the mortgage but, as her income was insufficient to raise the required mortgage, the bank insisted on a joint mortgage, so my name is on the deeds of the apartment. Just to be clear, I never lived in the property (indeed, I only visited it twice) or contributed towards the monthly repayments - I have been living abroad for most of the past few years. I did contribute €8,000 towards the deposit on an unofficial "no interest loan" basis. I now wish to buy a small apartment but have discovered that I am liable for stamp duty because the Revenue no longer considers me a first-time buyer. How can I prove my "non-interest" in the apartment? My local Revenue office says it's a cut-and-dried case. Furthermore, my cousin is set to make a profit of €100,000 on the sale and has offered to give me back my €8,000 as soon as the sale goes through. However, I think that I should get more of a share than that.
With more and more friends and family buying property together, yours is a cautionary tale. Despite your day-to-day non-involvement with the property, you did sign up for ultimate involvement when you became a co-owner, so you are no longer a first-time buyer and you will have to pay stamp duty on your new home. How far you want to push the share of the profits issue depends on your stomach for legal wrangling. You would appear to be the equal owner of the apartment so you would then be entitled to an equal share of the profits. Your cousin knows this very well and may just be chancing her arm in offering you the return only of your initial deposit.
Is there a member of the family who could mediate between the two of you? For a successful mediation you will have to try to see her side of the story because she, most likely, will not easily agree to a 50:50 split. She lived in the apartment, paid all insurances, repayment, maintenance and decoration. She probably feels she has "earned" the profit and needs it for her next hitch up the property ladder so a compromise might be called for.
"Strangers in law" who are buying property together must get a separate legal document drawn up that clearly outlines what is to happen in the case of several eventualities - for example, if one party wants to sell and the other doesn't or, as in your case, how a profit made on an eventual sale is going to be split.
Renting a room
As a first-time buyer looking for a mortgage, every penny counts and my mortgage broker has advised me to include rental income in my mortgage application. My understanding is that all investors pay stamp duty. Does this mean that the house is now an investment and will be subject to stamp duty?
No. Thanks to the "rent-a-room" scheme, it is not unusual for first-time buyers to include potential rental income in their mortgage application to bump up the amount of the loan. Homeowners can rent a room for up to €635 a month without having to pay income tax on the money and it doesn't make them investors.
Send your queries to Property Questions, The Irish Times, 10-16 D'Olier Street, Dublin 2 or e-mail propertyquestions@irish-times.ie.
Unfortunately, it is not possible to respond to all questions. The above is a representative sample of queries received. This column is a readers' service and is not intended to replace professional advice. No individual correspondence will be entered into.
