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stalledFTB

Serious Advice Needed

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Hi all, I am after some serious advice. In the Spring of 2004, at the height of the boom my Parents offered me 70K early inheritence so that the wife and I could afford a modest victorian terrace. At the time I was conviced that property was at least 30% overvalued and said that I would use the money when prices had come down to a reasonable level and buy either a better house, or the same type of property and invest the rest of the money elsewhere.

Now its Jan 2006 and property prices have stagnated, yet no real drops. I do however believe that at least 10% could be knocked off the silly asking prices, as the market is pretty dead around here.

My question is this, Shall I just take the 70K, and use it to buy an overpriced house? May seem daft but the following worries me. My parents are 67 and 62, who knows how long they have left and this raises the very ugly matter of Inheritence tax. If I take the dough now that gives a 7 year window until no IT is payable on the sum. If I hold out for another say 2/4 years waiting for the HPC that makes 9/11 years until no IT is payable, that takes my parents way up onto their 70s. Are House prices going to crash to such an extent that is is worth me and the Mrs paying 6K a year in rents for a few more years and then risking getting taxed at 40% on the 70K (28K in tax). In this nightmare scenario it seems either way this rotten government win, either by me being another mug punter paying well over the odds for a modest gaff or they nick 40% of my dads hard earned through IT.

I hate even thinking about such morbid topics, but this awful housing boom makes us have to address these issues.

I should mention that my father is stubborn and will not hand over the dough to me until I have a house ready to move into, daft I know as this would start the 7 year IT free clock from now, but its his dough and I cannot tell him when to part with it.

I would really appreciate some good advice on this one.

What would you do in this situation?

Edited by stalledFTB

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Can the money be put into trust now?

That way I believe it is out of your parent's control, and not subject to inhertance tax. I think you could set one up for a grand or so.

I'm not a solicitor, but I've heard of this sort of thing, and I'm sure a solicitor will give you a free session of advice on this.

Also, it may be possible to include a clause in the trust fund that the money can only be released to purchase a property.

But please, get some advice from a solicitor.

Edited by Adam

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Can the money be put into trust now?

That way I believe it is out of your parent's control, and not subject to inhertance tax. I think you could set one up for a grand or so.

I'm not a solicitor, but I've heard of this sort of thing, and I'm sure a solicitor will give you a free session of advice on this.

Also, it may be possible to include a clause in the trust fund that the money can only be released to purchase a property.

But please, get some advice from a solicitor.

Cheers for the reply Adam, I guess putting it in trust is a possibility. However as my father is retired and living on a fixed income he is used to getting interest off his savings, possibly another reason he wishes to hold on to the sum till I purchase a property.

If It was a straight forward decision between buying now with the dough or waitng another few years hoping for a major HPC and risking 40% Inheritence Tax in the process, which way would you go?

The wife and I (especially the wife) are just sick to death of putting our life on hold and living in rented accomadation that we cannot turn into a proper "home". I know all the signs point to a recession and HPC, the economy looks like its going to head very far south, yet when will it happen??

All replies from HPCers appreciated!!!!

Edited by stalledFTB

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As long as your father is in good health he should be around for a few years yet. In that case I would say wait as long as you are reasonably certain he will be able to advance the money in about 3 years.

As mentioned earlier, if you want to guard against the posability of early death then £25,000 of "term" life insurance for a few years would be relatively cheap.

Basically, I expect HP losses of up to 50%, I would chance the IHT to guard against this.

Of course I don't know where you live, if prices in your area are more reasonable than average then you might wish to buy.

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At christmas my dad was talking about setting up a loan from him to me at 0%, he gives me some money with a clause saying he doesnt need it back after his death, because its a loan its seen as debt and it wouldnt get taxed. Not sure of the details but my dad is the same..... and i agree it is his money, the interest on the money would be nice now but thats life....

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As long as your father is in good health he should be around for a few years yet. In that case I would say wait as long as you are reasonably certain he will be able to advance the money in about 3 years.

As mentioned earlier, if you want to guard against the posability of early death then £25,000 of "term" life insurance for a few years would be relatively cheap.

Basically, I expect HP losses of up to 50%, I would chance the IHT to guard against this.

Of course I don't know where you live, if prices in your area are more reasonable than average then you might wish to buy.

Life insurance? Thats one road I have never even considered, just how would that work in this situation??

I live in North Herts BTW and property is not reasonable here at all, looking at 180K for bog standard terrace, 200-250K for a decent sized one without shared access back garden.

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What i would do.

Take the £70k now.

Give the interest to your dad in cash.

wait it out for 1/2 years and buy

Only 5 years left to clear inheritance tax.

i take it they will break the current £250k inheritence barrier than if they both popped it soon??

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You should remember that it is not you that would be liable for the IHT on the £70K that they have given away, it is your parents' estate that pays the IHT.

If they haven't given away the money then they pay the IHT. If they have given you the money then the IHT is payable on a reducing sliding scale over 7 years. So from the IHT point of view the sooner they give you the money the better.

But the trick here may be to make sure that both your parents make full use of their nill rate IHT allowance. ie your mother can will you about £250k on her death and your father can will you another £250k on his death. From the IHT point of view what you do not want is for your father to will everything to your mother and your mother to will everything to your father. Using this trick you can pass about £500k from generation to generation without paying IHT.

You must get professional advice. There are plenty of IFAs prepared to give it for free as it can involve setting up a trust fund and investing money so the IFA makes a commission along the way.

Edited by Surrey cash buyer

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What i would do.

Take the £70k now.

Give the interest to your dad in cash.

wait it out for 1/2 years and buy

Only 5 years left to clear inheritance tax.

i take it they will break the current £250k inheritence barrier than if they both popped it soon??

Tried that one, my father is a stubburn so and so and wont hand the cash over until I have agreed to buy a property. God knows why as he is usually finacially astute, but on this one he wont hand it over till I commit, I cant force his hand its his money after all. I feel like Im hitting my head against a brick wall with him sometimes.

In relation to the IT barrier, their house is currenly valued at 350K so just the house well and truly put their money into the hands of the fat controller and his hoards of the UK Chav superclass of scroungers

Edited by stalledFTB

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Tried that one, my father is a stubburn so and so and wont hand the cash over until I have agreed to buy a property. God knows why as he is usually finacially astute, but on this one he wont hand it over till I commit, I cant force his hand its his money after all. I feel like Im hitting my head against a brick wall with him sometimes.

If you go along the Trust route and getting IHT advice make sure that you go to an IFA experienced in these matters and do it through a solicitor who does Trusts all the time. You need to ensure that you are getting the best and most up-to-date information on this one. The Law Society can give you details of solictors in your area that specialise in Trusts - they will usually have links with IFAs who specialise in this field.

Good Luck :)

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Cheers for the reply Adam, I guess putting it in trust is a possibility. However as my father is retired and living on a fixed income he is used to getting interest off his savings, possibly another reason he wishes to hold on to the sum till I purchase a property.

This is not just stubborn on his part, it is inconsistent. If you bought now with his money, he would lose the interest income anyway. Let's face it, he is using the offer of early inheritance to control your life.

frugalista

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This is not just stubborn on his part, it is inconsistent. If you bought now with his money, he would lose the interest income anyway. Let's face it, he is using the offer of early inheritance to control your life.

frugalista

Yea I agree with Frugalista, and you shouldn’t really give a sh*t about your dad’s money. What’s wrong with making your own money?

If I were you, which I am not, I would tell him to keep the money and go on a three year round the world cruise with your mum, Christ the bloke has worked his whole life, why not let him do something really good at the end?

You're only going to lose it anyway, either to the Gordon Brown or some f*ckwit EA.

Dunno what you should do about the high maintenance missus though <_<

Edited by ?...!

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Go for the house then. Take advantage of the crash which is in fact taking place IMO. Make sure you knock 20 - 30 % off the value (not the asking price). Nothing wrong with buying a house today as long as you get a very good deal. You will be helping the crash.

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In relation to the IT barrier, their house is currenly valued at 350K so just the house well and truly put their money into the hands of the fat controller and his hoards of the UK Chav superclass of scroungers

Actually I think that IHT is not going to be an issue for your father if he dies within the next few years.

The reason is that the house is valued at £350,000 so his share is only £175,000. With the IHT zero rate band at £275,000, unless he has £100,000 of other assets kicking around then it is not going to be an issue.

Furthermore, on death, I assume that your fathers share in the house will be left to your mother in which case this part of the estate is exempt anyway so he can have up to £275,000 other assets.

The problem will arise when the other parent dies because the whole of the house will then be owned by them and will be subject to IHT. This is however a different issue.

Of course with the crash coming your parents house will be worth all of about £10 by the time they die. Suggest you poison both of them then sell up and pay the IHT (joke)

:D

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Yea I agree with Frugalista, and you shouldn⦣8364;™t really give a sh*t about your dad⦣8364;™s money. What⦣8364;™s wrong with making your own money?

If I were you, which I am not, I would tell him to keep the money and go on a three year round the world cruise with your mum, Christ the bloke has worked his whole life, why not let him do something really good at the end?

You're only going to lose it anyway, either to the Gordon Brown or some f*ckwit EA.

Dunno what you should do about the high maintenance missus though <_<

Cheers for that helpful reply. My parents not being the materialistic sort would like to give their offspring a helping hand in life, strange that hey? They are comfortably off and dont feel the need to keep up with the rest of the consumerist madness prevellant in the UK.

Thanks anyway, now crawl back under your bridge.

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This is not just stubborn on his part, it is inconsistent. If you bought now with his money, he would lose the interest income anyway. Let's face it, he is using the offer of early inheritance to control your life.

frugalista

I hate to state the obvious, but our parents give us our life, and more. I don't see his generous offer as an attempt to control you, he is clearly afraid that giving you the money for anything other than a down payment on a house, could lead to complications that none of us could foresee. It's his money, and the way in which he shares his equity is for himself and your mother to decide - the only exception would be if it was not fair to all siblings.

I have become increasingly vexed about the expectations of many siblings in their 40s and 50's who seem to perch like vultures waiting for their parents to drop dead. A colleague once called it the cul-de-sac mentality and parodied the millions of siblings sitting, and waiting, in the hope of being able to buy a better house when their parents pop their clogs. New Britain can seem very ugly, and the pyramid selling housing policy of New Labor has made it worse by creating wealthy older generation and grotesquely indebted younger generation.

I would remind everyone that a house is for living in and that it creates no real wealth. If your personal circumstances allow, then renting for the next 2-3 years seems to make sense from an investment viewpoint, if not then buy a modest house and remember when there is a crash every house owner falls with you and your next purchase may be a bargain.

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I have become increasingly vexed about the expectations of many siblings in their 40s and 50's who seem to perch like vultures waiting for their parents to drop dead.

I am stalledFTB's wife and i take great offence that people just assume that we expect this money off my husbands parents. I would like to make the following points:

1. We are not a middle aged couple in their 40's waiting for a meal ticket. We are a young married couple.

2. We are both working hard to make our own money (i personally am studying to obtain a professional qualification, but will not be qualified for a few years yet).

3. This money was offered to us. We never asked or even hinted.

So i wish when my husband asked for some seriuos advice, he does not get called a vulture, or myself 'high maintenance'.

Mrs StalledFTB

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Why not put some much lower offers in on properties that you both like. At the end of the day if you think there is going to be a crash then offer low and cite this forum. Saying you are keen to find somewhere to live but you don't think the price is correct. Offer what you feel comfortable with not what the seller wants and see how you get on.

If you are sucessful then there is no reason why you can't be happy and your father will be proud of you for negotiating a good deal.

Here is an example earlier in the year a detached house came up in an ok area for 180k I put an offer in at 120k and he came back with 135k I didn't go for it in the end because 120k was my budget. The EA hated me and couldn't believe the buyer was interested. But I set out my points to the buyer as to why I felt that was the value and he accepted them to an extent as shown by the huge drop he was prepared to make. It wasn't like it was particualrly overpriced compared to others in the market at that time either.

If you look at the market falling 30% which is a pretty pessimistic estimate then I had knocked off 25% with well thought out and presented offer nearly affording me the protection I would have needed.

If you try that and it works why not buy? You need to watch the market though and go for people who need to sell. No good trying it in the first week on the market :)

Brendan

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I am stalledFTB's wife and i take great offence that people just assume that we expect this money off my husbands parents. I would like to make the following points:

1. We are not a middle aged couple in their 40's waiting for a meal ticket. We are a young married couple.

2. We are both working hard to make our own money (i personally am studying to obtain a professional qualification, but will not be qualified for a few years yet).

3. This money was offered to us. We never asked or even hinted.

So i wish when my husband asked for some seriuos advice, he does not get called a vulture, or myself 'high maintenance'.

Mrs StalledFTB

1) thats like me but im single so i have one wage to try and buy a place

2) hey thats like me too! except i work full time aswell.

3) chance would be a fine thing, i will never ever see any inheritance, i really do have to make all my own money

He has recieved some serious advice and some not so serious advice its the internet, your bound to get some answers that you dont like on an open forum, it is nieve to ask for advice about 70K and think that some people wont just think "thats more than i would earn gross in x years and your worried about paying tax". It is also indearing to see the wife come running to the husbands side because of something that was said on a internet forum although maybe a little unneeded :)

None of that is meant offencivly so please dont take it as such :)

If i was given 70K as a down payment on a place i would just buy a place to live. Depends how much you want a mortgaged property i suppose. If someone was going to give me £40K+ for doing nothing but it has to be spent as a down payment i would just do it (after questioning why they felt the need to stipulate what i could spend it on) . Buy a small flat for £80K use the £40K+ to pay for half of it.

I was going to carry on typing but ive bored myself.

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Cheers for that helpful reply. My parents not being the materialistic sort would like to give their offspring a helping hand in life, strange that hey? They are comfortably off and dont feel the need to keep up with the rest of the consumerist madness prevellant in the UK.

I hope you weren't offended by my comment. It was a bit rash of me. Sorry.

To be more constructive, I think you should just buy now with the money. Will you lose money on the house? Probably. But you want to buy soon anyway. And with 70k instant equity, you can afford the risk of a downturn. At least you are a bit past the inflation peak and you are buying in a buyer's market, so you can haggle really hard. Just make sure you get something you are going to be happy with for a long time.

The rest of us have to try to time the market, we have no choice.

frugalista

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1) thats like me but im single so i have one wage to try and buy a place

2) hey thats like me too! except i work full time aswell.

3) chance would be a fine thing, i will never ever see any inheritance, i really do have to make all my own money

He has recieved some serious advice and some not so serious advice its the internet, your bound to get some answers that you dont like on an open forum, it is nieve to ask for advice about 70K and think that some people wont just think "thats more than i would earn gross in x years and your worried about paying tax". It is also indearing to see the wife come running to the husbands side because of something that was said on a internet forum although maybe a little unneeded :)

None of that is meant offencivly so please dont take it as such :)

If i was given 70K as a down payment on a place i would just buy a place to live. Depends how much you want a mortgaged property i suppose. If someone was going to give me £40K+ for doing nothing but it has to be spent as a down payment i would just do it (after questioning why they felt the need to stipulate what i could spend it on) . Buy a small flat for £80K use the £40K+ to pay for half of it.

I was going to carry on typing but ive bored myself.

I have been a member of this site since the original grey one, I know that all sorts post on here and the honest opinions of people on here is why I love the site. My wife never has posted before and I was shocked to see that she had.

I can understand the malice of those with no money coming their way unless through their own endevours. I know that I am lucky I have parents who care about their kids, this may well be unusual in post Thatcher now Blairs Britain.

All I want is genuine opinions on whst way to jump, not snidey swipes at my wife, or accusations of pushing my Dad into an early grave.

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I hate to state the obvious, but our parents give us our life, and more. I don't see his generous offer as an attempt to control you, he is clearly afraid that giving you the money for anything other than a down payment on a house, could lead to complications that none of us could foresee. It's his money, and the way in which he shares his equity is for himself and your mother to decide - the only exception would be if it was not fair to all siblings.

I have become increasingly vexed about the expectations of many siblings in their 40s and 50's who seem to perch like vultures waiting for their parents to drop dead. A colleague once called it the cul-de-sac mentality and parodied the millions of siblings sitting, and waiting, in the hope of being able to buy a better house when their parents pop their clogs. New Britain can seem very ugly, and the pyramid selling housing policy of New Labor has made it worse by creating wealthy older generation and grotesquely indebted younger generation.

I would remind everyone that a house is for living in and that it creates no real wealth. If your personal circumstances allow, then renting for the next 2-3 years seems to make sense from an investment viewpoint, if not then buy a modest house and remember when there is a crash every house owner falls with you and your next purchase may be a bargain.

Well I hate to state the bleedin' obvious too but some of us CANNOT BUY A HOUSE. They cost too much money. How very vexing indeed.

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not having a go at stalled ftb!

but my parents also have offered to help me out with buying a house.

they have offered me various amounts varying from 3k to 30k which i refused point blank

if i cant buy it with my money i cant afford it.

as for my parents money they can keep it and do what they want with it whatevers left if any? will be mine one day or not who cares?

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  • 301 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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