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  • FIRST POST
    • simon reed
    • By simon reed 19th Apr 17, 2:24 PM
    • 3Posts
    • 0Thanks
    simon reed
    Sibling House Purchase.
    • #1
    • 19th Apr 17, 2:24 PM
    Sibling House Purchase. 19th Apr 17 at 2:24 PM
    Iím currently renting but donít want to purchase a house at the moment. My sister however is looking to move out but doesnít have enough of a deposit but could afford the mortgage payments on a flat.
    Whatís my best option here?
    Should I purchase the flat as a first time buyer and pay the deposit. Then receive rental from my sister (she would actually pay the mortgage). Iíd get a better interest rate than her but lose my first time buyer status (not sure that will make a difference as any help to buy schemeís wonít be used for my own purchase as the property value is to low) and then have to declare the rental income.
    Or do I gift payment her the deposit, let her get the mortgage and take advance of any first time buyer scheme plus pay the mortgage. If at any point in-time the property is sold can I then get money back from my sister as a gift payment, therefore avoiding any income tax?
    Rgds,
Page 1
    • Penitent
    • By Penitent 19th Apr 17, 2:33 PM
    • 614 Posts
    • 1,618 Thanks
    Penitent
    • #2
    • 19th Apr 17, 2:33 PM
    • #2
    • 19th Apr 17, 2:33 PM
    Is there any reason she needs to move now? Could she wait until she saves up her own deposit?
    • simon reed
    • By simon reed 19th Apr 17, 2:46 PM
    • 3 Posts
    • 0 Thanks
    simon reed
    • #3
    • 19th Apr 17, 2:46 PM
    • #3
    • 19th Apr 17, 2:46 PM
    No reason. just thought my money would be better invested in a flat than the bank.
    • G_M
    • By G_M 19th Apr 17, 3:22 PM
    • 38,817 Posts
    • 44,018 Thanks
    G_M
    • #4
    • 19th Apr 17, 3:22 PM
    • #4
    • 19th Apr 17, 3:22 PM
    Iím currently renting but donít want to purchase a house at the moment. My sister however is looking to move out but doesnít have enough of a deposit but could afford the mortgage payments on a flat.
    Whatís my best option here?
    YOUR best option, or hers?

    Should I purchase the flat as a first time buyer and pay the deposit. Then receive rental from my sister (she would actually pay the mortgage). Iíd get a better interest rate than her
    I suspect the rate you'd get for a BTL mortgage would NOT be better than the rate she could get on a residential mortgage.

    Don't forget the tax you'd have to pay on the rent(mortgage payments) you receive.

    Do you want to be a landlord? See link below.

    but lose my first time buyer status (not sure that will make a difference as any help to buy schemeís wonít be used for my own purchase as the property value is too low) and then have to declare the rental income.
    Ah! Good. Well spotted!

    Or do I gift payment her the deposit, let her get the mortgage and take advanceadvantage? of any first time buyer scheme plus pay the mortgage. If at any point in-time the property is sold can I then get money back from my sister as a gift payment, therefore avoiding any income tax?
    Rgds,
    Originally posted by simon reed
    Yes you can get it back providing she pays it! Or you could place a Charge on the property ensuring it is paid back when sold, just like a mortgage, though her mortgage lender may not like you gifting it to her.

    No, repayment of a gift would not be taxable as income.


    * New landlords: advice, information & links
    • AnotherJoe
    • By AnotherJoe 19th Apr 17, 3:26 PM
    • 5,956 Posts
    • 6,234 Thanks
    AnotherJoe
    • #5
    • 19th Apr 17, 3:26 PM
    • #5
    • 19th Apr 17, 3:26 PM
    Sounds like a big mess in the making. Steer clear.
    • simon reed
    • By simon reed 19th Apr 17, 3:43 PM
    • 3 Posts
    • 0 Thanks
    simon reed
    • #6
    • 19th Apr 17, 3:43 PM
    • #6
    • 19th Apr 17, 3:43 PM
    Best for both of us. She wants to move out. I want to get on the property market.


    She can afford to rent somewhere but can't purchase.


    I can't afford currently to purchase the +750K house I want but have cash sitting in the bank doing nothing.
    • xylophone
    • By xylophone 19th Apr 17, 3:53 PM
    • 20,916 Posts
    • 11,996 Thanks
    xylophone
    • #7
    • 19th Apr 17, 3:53 PM
    • #7
    • 19th Apr 17, 3:53 PM
    Is it possible (work etc), for your sister to live with you?

    Could you buy a property large enough for you to share and not charge her rent, ( only half of the bills), thus enabling her to save a deposit for a place of her own?

    You could then sell the flat when you are in a position to afford the property you want.
    • Cakeguts
    • By Cakeguts 19th Apr 17, 4:02 PM
    • 1,966 Posts
    • 2,458 Thanks
    Cakeguts
    • #8
    • 19th Apr 17, 4:02 PM
    • #8
    • 19th Apr 17, 4:02 PM
    This idea comes under never rent to family or friends. If you want to remain on speaking terms with your sister it would be better for her to save up for her own deposit.
    • lovinituk
    • By lovinituk 19th Apr 17, 4:10 PM
    • 4,849 Posts
    • 5,322 Thanks
    lovinituk
    • #9
    • 19th Apr 17, 4:10 PM
    • #9
    • 19th Apr 17, 4:10 PM
    It does sound like a disaster waiting to happen. No matter how amicable you are with your sister now, that could change horribly in the future, particularly where money and someones home is involved.
    The following is my forum signature and not necessarily a response to your post:
    "To be truly successful you must live a few years of your life like others wonít so you may live the rest of your life like others canít"
    • Caz3121
    • By Caz3121 19th Apr 17, 5:58 PM
    • 10,280 Posts
    • 6,728 Thanks
    Caz3121
    [FONT=Verdana]
    [FONT=Verdana]Should I purchase the flat as a first time buyer and pay the deposit. Then receive rental from my sister (she would actually pay the mortgage). Iíd get a better interest rate than her
    Originally posted by simon reed
    have you looked at deposit requirements and interest rates for Regulated Loans? (you would need this rather than a regular Buy to Let Mortgage)
    You may find that when she has saved, she would need a lower deposit and get a better rate as a residential mortgage
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