Lawlink – What can I do to make sure both me and my partner are protected in property purchase?

white and red wooden house beside grey framed magnifying glass
Stock photo.

Q. I live in an apartment with my partner of several years. We had been renting it, but the chance came to purchase it. The mortgage is in my name only, my partner was not in a financial position to buy with me. He previously paid a sum towards the rent, and he continues giving me that sum. We get along very well, of course, but are both pragmatic and want to make sure that we are both protected. Is there anything we should be looking at or worried about moving forward?

Dear Reader,

The first thing that you should consider is how the sum from your partner would be considered for the purposes of income tax. The sum he pays would no doubt show on your accounts and should be considered an income, and therefore liable to tax.

While there are various tax reliefs for ‘Rent A Room’ schemes, those would not apply to your partner. Seeking to claim a tax relief that you are not entitled to would no doubt cause significant difficulties down the road (especially if, say, any joint tax application or joint social welfare application is made in the future).

You would have to give consideration to treating the sums received as income, and therefore liable to tax. You should discuss this matter with your accountant or tax advisor. Perhaps your partner might contribute in other ways, such as taking the burden of paying electricity bills or grocery shopping.

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After a period of five years (three if you and your partner have children), your partner would be regarded as a cohabitee and may be entitled to claim a share of the property. There is no automatic entitlement to a share of the property, but he would be entitled to seek a share from the courts.

If such a claim is made, it would not be limited to transfers of sums of money between you both. It would also include so-called ‘indirect contributions’. This would include payments towards bills, groceries, as well as perhaps non-financial contributions in maintaining the home (or children, if that applies to your own situation).

It is always useful to sit down with your partner and discuss matters such as this. If you agree that he would not be entitled to a share of the property, you can enter into a Cohabitation Agreement, that will clearly set out what each of you would be entitled to moving forward.

If you have any questions, do contact your own solicitor or tax advisor.