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    • Grace12
    • By Grace12 23rd Nov 17, 4:00 PM
    • 3Posts
    • 0Thanks
    Grace12
    Buying into parents propert
    • #1
    • 23rd Nov 17, 4:00 PM
    Buying into parents propert 23rd Nov 17 at 4:00 PM
    I just need some advice really and hope you can help.

    Currently selling a business owned as a partnership with my husband and unfortunately going through a divorce. We haven't agreed on a settlement as yet although we have discussed a mutual amount on the basis of having 2 children under 16.
    However my share wont be enough to buy a house outright and I wont have a job immediately to be able to get a mortgage.
    So an alternative option is to rent for a while or buy into a parents property.
    My parent is retired age 77 and still has a mortgage of £99,000 on a buy to let and the property is worth £385,000. So my intention would be to pay off the outstanding mortgage and put an extension on so there is enough room for myself , parent and 2 children.
    I understand this would need to be drawn up with solicitors and deeds etc.
    But what are the implications with regards to Inheritance Tax if anything happens to her and are there any other issues I may not have thought about. As I have 2 siblings as well.
Page 1
    • G_M
    • By G_M 23rd Nov 17, 4:12 PM
    • 42,776 Posts
    • 49,999 Thanks
    G_M
    • #2
    • 23rd Nov 17, 4:12 PM
    • #2
    • 23rd Nov 17, 4:12 PM
    ......buy into a parents property.

    My parent is retired age 77 and still has a mortgage of £99,000 on a buy to let and the property is worth £385,000.

    So my intention would be to pay off the outstanding mortgage
    So you plan to pay your parent £99K?
    and put an extension on so there is enough room for myself , parent and 2 children.
    and then invest £50K? £100K? into the property?
    I understand this would need to be drawn up with solicitors and deeds etc.
    But what are the implications with regards to Inheritance Tax if anything happens to her and are there any other issues I may not have thought about. As I have 2 siblings as well.
    Originally posted by Grace12
    1) Your parent currently lives elsewhere yes? He/she owns another property? Which will be sold? Or what?
    2) Since you plan to jointly own ths property, you'll need to own as 'Tenants in Common', and execute a Deed specifying who owns what %, and ideally also what would happen in the event of future changes eg
    * one of you gets a new partner
    * one of you dies
    * one wants to move/sell
    etc

    3) as your parent currenty lives elsewhere, Capital Gains Tax will be due on the % of the property sold to you.

    4) will the 'extension' be self-contained'? This may become critical in future eg if parent goes into care

    5) on death, if the property is owned at Tenants in Common, then inhertance of that party's share will be as per their will. (if you owned as Joint Tenants, the surviving owner would automatically own the entir property).

    6) either way, Inheritance tax would be due on the value of the deceased's share (along with other assets) in the normal way

    7) 'deprivation of Assets is often raised here in these instances - but provided you pay market value for your share, it should no be relevant.

    8) your prent will need to consider your siblings (assuming they would be intended to inerit equally!). If you inherit the parent's share of the property, is there sufficient elsewhere in the Estate for siblings to each inherit equitably (eg the car, jewelry, investments, lafe insurance, yacht etc

    9) I assume you have considered Planning Permission (and any property covenants)? f not, this may be a non-starter!
    Last edited by G_M; 23-11-2017 at 4:16 PM.
    • 00ec25
    • By 00ec25 23rd Nov 17, 5:08 PM
    • 5,781 Posts
    • 5,229 Thanks
    00ec25
    • #3
    • 23rd Nov 17, 5:08 PM
    • #3
    • 23rd Nov 17, 5:08 PM
    confusing, which property are you proposing to buy into? The one parents currently live in, or the BTL that parents currently own?

    if the BTL, who lives there now?
    Do you mean you want parent to evict their tenant so you can move in yourself? Your comment that mother will then join you makes no sense in such a context.
    Last edited by 00ec25; 24-11-2017 at 10:48 PM.
    • G_M
    • By G_M 23rd Nov 17, 9:00 PM
    • 42,776 Posts
    • 49,999 Thanks
    G_M
    • #4
    • 23rd Nov 17, 9:00 PM
    • #4
    • 23rd Nov 17, 9:00 PM

    if the BTL who lives there now? Do you mean you want parent to evict their tenant so you can move in yourself?
    Originally posted by 00ec25
    that was how I read it.
    • xylophone
    • By xylophone 23rd Nov 17, 10:23 PM
    • 24,042 Posts
    • 14,047 Thanks
    xylophone
    • #5
    • 23rd Nov 17, 10:23 PM
    • #5
    • 23rd Nov 17, 10:23 PM
    I am finding this very confusing.

    The OP's mother owns both her own home (where she is currently resident) and a house which she lets out and on which she has a BTL mortgage?

    The OP wants her mother to give the tenant notice so that the OP can buy the BTL for under market value?

    Once purchased, the OP wants to extend the house with what remains of her divorce settlement so that her mother can move from her existing home and live with the OP and the grandchildren?

    Will the mother sell her existing property?
    • Grace12
    • By Grace12 4th Jan 18, 7:08 PM
    • 3 Posts
    • 0 Thanks
    Grace12
    • #6
    • 4th Jan 18, 7:08 PM
    • #6
    • 4th Jan 18, 7:08 PM
    Thank you so much for your reply.
    This is the situation, my mother owns a property in Cornwall which is her main home however she stays at her boyfriends now and then. She also has another property which she rents out completely but also has a mortgage on that for £200,000.on that.
    I know its a bit of a mess and to be honest I have just spoken with my mother as her term of mortgage buy to let is up and she is in negotiation with them currently to do a repayment mortgage. Then hopefully I could invest.
    Just out of interest how much would capital Gains be on £99,000?
    thank you so much for all your fantastic advice this is the first time i have ever been on and its amazing!!!!!!
    • TBagpuss
    • By TBagpuss 4th Jan 18, 7:43 PM
    • 6,156 Posts
    • 7,919 Thanks
    TBagpuss
    • #7
    • 4th Jan 18, 7:43 PM
    • #7
    • 4th Jan 18, 7:43 PM
    The amount of CGT will depend on what the value of the property was when your mother bought bought it (as the tax is on the gain and on what other chargeable gains she has made in the relevant tax year and what her income is. There is a calculator here https://www.uktaxcalculators.co.uk/capital-gains-tax-calculator.php which would give you an idea, i you know those things.

    You and your mother would each need to get separate and independent advice to make sure that you were both protected. For instance, the declaration or trust that you and your mother have would need to take into account both what you pay to buy into the property, and whatever value you add through the extension, and should also set out how the costs of the property upkeep will be shared, and when and in what circumstnaces either of you can force a sale.

    You mum will need to update her will - she might, for instance, set it up to give you the right to remain in the property for (say) 6 months or a year after her death to allow you time to find alternative housing or to get a mortgage to buy out your siblings, unless her assets are such that she would be able to leave the house to you and other assets of similar value to your siblings.
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