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Buying The G/f Parents House

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my G/F parents are not getting younger and their health is not getting better.

they have a large family home which they are struggling to clean etc, and TBH they dont need the space. we have spoken about buying their house, and they agreed they would like that when the time is right (5 years or so time).

they are not bothered about the money, they paid £20k nearly 30 years ago, and if it was modernised, would be worth (in todays market) £250k - £320k.

the only thing they have said is that the house they move to (bungalow) is mortgage free (their current house is) and their son does not loose out on inheretance.

what they have said is that we buy their new house for them, (approx £120k to £180k) and my G/F gets the family house 100% as her inheritence.

they have asked for me to look into it.

the plan i have come up with is and was wondering if you see any issue with it. all prices are todays value as i can not see 5 years into the future, but the theory is stil lthe same, unless there is a massive disjointed correction in house prices.

we legally buy the family home for £1, this is to get the deeds etc.

we then mortgage the house to the value of their new house + a bit to modernise the property if our savings dont streach to it. hoping to have at least 30% equity left in the house, this becomes the G/F's inheritence. to do it this way (In my head) would get us a more favourable IR, plus i dont want ot put my saving into getting the mortgage to acheive a 90% LTV,

we give the cash to her parents to buy their new house with cash.

the new property becomes 75% her brother inheritence and 25% the G/F's

how does that sound? or can you think of another way of doing this

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Tax. Tax rules will sink you unless you get good, professional advice.

gifting, CGT, transfers counted as your 'income', all of them are buggers. don't do anything without the right advice. As an example, if they 'sell' the property to you for a quid, who knows if the taxman will see that as a 'gift' of 300k and leave your G/F liable for tax...

Edited by wherebee

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Tax. Tax rules will sink you unless you get good, professional advice.

gifting, CGT, transfers counted as your 'income', all of them are buggers. don't do anything without the right advice. As an example, if they 'sell' the property to you for a quid, who knows if the taxman will see that as a 'gift' of 300k and leave your G/F liable for tax...

didnt think about Tax, bugger.

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didnt think about Tax, bugger.

Tax is not the end of the world on their primary residence.

There are two taxes you need to think about: CGT and Inheritance.

As it is their main house, there is no CGT to pay. Regardless of whether they give you the house now, or in 5 years, there will be IHT to pay, if they are over the threshold (about 500K for 2 people as a I recall).

So, they give you the house. For an ordinary asset, that would trigger a CGT event, so they (not you) would be taxed on the market value less the purchase price, less indexation and the like. But it is their primary residence, so no tax to pay.

If they survive 7 years, any potential IHT obligation also falls away. If their total estate will be below the threshold, there is nothing to pay anyway.

Note that this is not proper tax advice, you need to get this done properly. However, getting rid of any asset (primary residence, Cash, ISAs) is pretty easy.

Any proper advisor (and they need one) will point out that they are running a massive risk with your strategy as described. Say your GF meets an unfortunate accident halfway though. You own their house...and then you are supposed to mortgage it to buy their new one. You might choose not to do this....

Edited by rxe

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ok thats clearer, i'm will not be using the advice gained on here as 100% factual, and i will seek proper advice from a professional when/if the time arrises.

at the mo its just getting ideas and seeing if it is viable. alot can happen over the next 5 years and we may decide that the family home is not right for us, etc.

all advice/ideas/posts are appreciated

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we legally buy the family home for £1, this is to get the deeds etc.

we then mortgage the house to the value of their new house + a bit to modernise the property if our savings dont streach to it. hoping to have at least 30% equity left in the house, this becomes the G/F's inheritence. to do it this way (In my head) would get us a more favourable IR, plus i dont want ot put my saving into getting the mortgage to acheive a 90% LTV,

we give the cash to her parents to buy their new house with cash.

the new property becomes 75% her brother inheritence and 25% the G/F's

how does that sound? or can you think of another way of doing this

As said the tax man will be after his cut, in particular the property will be subject to Land Registry fee which is payable on the value not the sale price, in a normal market sale these will be one and the same but in a shame £1 sale it won't be.

Find the appropriate price for the house, get them to sell it to you at that price. When you apply for the mortgage you just tell the mortgage company that the value is say £250k and you only need £150k the fact the 100k doesn't exist is neither here or there and of no concern to the mortgage company, they are just interested in is the LTV (value) not LTP (Price). They just want to be sure if you go belly up they can get their money back.

You will need a solicitor any way so just get one and explain the situation to him.

With regard to inheritance then they just need to write an appropriate will.

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  • 285 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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