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    • TripleB32
    • By TripleB32 5th Dec 17, 11:10 AM
    • 1Posts
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    TripleB32
    Advice on partial mortgage
    • #1
    • 5th Dec 17, 11:10 AM
    Advice on partial mortgage 5th Dec 17 at 11:10 AM
    Hello, newbie here looking for advice on a slightly unusual situation. Trying to get my head round possible options for us.
    We are currently renting a property from my MIL which she owns outright. It's been in the family for a couple of generations, and the plan is for the house to be left to my DH and his sibling. We have made this place our family home, and would like to buy it now just so that we have that security in the future.
    Would it be possible for us to buy half the house (we couldn't afford to buy it all) and have the other half gifted to us, without there being too many tax/other implications? We would be buying out his sibling early in effect.
    Thanks for any advice.
Page 1
    • getmore4less
    • By getmore4less 5th Dec 17, 11:16 AM
    • 30,847 Posts
    • 18,451 Thanks
    getmore4less
    • #2
    • 5th Dec 17, 11:16 AM
    • #2
    • 5th Dec 17, 11:16 AM
    CGT for the MIL is the most likely issue re tax.

    the will depend on when it was achired by the MIL, value then and value now
    • G_M
    • By G_M 5th Dec 17, 11:18 AM
    • 42,342 Posts
    • 49,187 Thanks
    G_M
    • #3
    • 5th Dec 17, 11:18 AM
    • #3
    • 5th Dec 17, 11:18 AM
    Seems a bit harsh on the sibling who loses out!

    MIL could certainly sell to you at half the market value (with you taking out a mortgage).

    MIL would have to pay Capital Gains Tax as the property is not her main residence. That would be based on market value, not sale price..

    The gifted element would be included in MIL's Estate for Inheritance Tax if she dies within 7 years.

    I asssume MIL has been paying income tax up to now on the rent........?
    • saajan_12
    • By saajan_12 5th Dec 17, 11:42 AM
    • 1,010 Posts
    • 678 Thanks
    saajan_12
    • #4
    • 5th Dec 17, 11:42 AM
    • #4
    • 5th Dec 17, 11:42 AM
    Hello, newbie here looking for advice on a slightly unusual situation. Trying to get my head round possible options for us.
    We are currently renting a property from my MIL which she owns outright. It's been in the family for a couple of generations, and the plan is for the house to be left to my DH and his sibling. - presumably the value of the other half will be left entirely to the sibling as DH has his half of the inheritance/gift now? We have made this place our family home, and would like to buy it now just so that we have that security in the future.
    Would it be possible for us to buy half the house (we couldn't afford to buy it all) and have the other half gifted to us, without there being too many tax/other implications? We would be buying out his sibling early in effect.
    Thanks for any advice.
    Originally posted by TripleB32
    Stamp duty: on the purchase price (cash + mortgage) you pay MIL for half the property. If you give figures we can help figure out how much (though likely v little if you're a FTB)

    CGT: for MIL based on current market value - her purchase price.

    IHT: For MIL's estate on the amount she wills to sibling unless she gifts that now as well. If MIL dies within 7 years of the gift to you, that gift also increases her estate's inheritance tax.


    Deprivation of assets: If MIL's assets aren't sufficient to cover any future care costs, this gift to you may be deemed to have deprived her of assets meaning she is not entitled to state funded care. Would you be willing/able to support her instead? Also, sibling's share would likely be used first as MIL still has that cash.. will sibling be happy to forego if there's nothing left to inherit or will you be willing/able to re-split the gift you recieved?
    • kingstreet
    • By kingstreet 5th Dec 17, 12:43 PM
    • 32,392 Posts
    • 17,394 Thanks
    kingstreet
    • #5
    • 5th Dec 17, 12:43 PM
    • #5
    • 5th Dec 17, 12:43 PM
    Would it be possible for us to buy half the house (we couldn't afford to buy it all) and have the other half gifted to us, without there being too many tax/other implications? We would be buying out his sibling early in effect
    Originally posted by TripleB32
    Yes. This is known as a concessionary purchase, or gifted equity purchase.
    I am a mortgage broker. You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice. Please do not send PMs asking for one-to-one-advice, or representation.
    • Cakeguts
    • By Cakeguts 5th Dec 17, 1:04 PM
    • 3,291 Posts
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    Cakeguts
    • #6
    • 5th Dec 17, 1:04 PM
    • #6
    • 5th Dec 17, 1:04 PM
    Don't ask. Wait to be offered the house. If you ask your MIL has to decide between you and the other sibling. This is not fair on her and it could create bad feeling in the family.

    You want the security of owning this house but you want to get this at the cost to the other sibling who has an equal right to it.

    Either buy a house on the open market or wait until you are offered the house.
    • kingstreet
    • By kingstreet 5th Dec 17, 3:12 PM
    • 32,392 Posts
    • 17,394 Thanks
    kingstreet
    • #7
    • 5th Dec 17, 3:12 PM
    • #7
    • 5th Dec 17, 3:12 PM
    I thought the purpose of the 50% mortgage was to pay out the other future beneficiary early?
    I am a mortgage broker. You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice. Please do not send PMs asking for one-to-one-advice, or representation.
    • eddddy
    • By eddddy 5th Dec 17, 3:27 PM
    • 5,551 Posts
    • 5,234 Thanks
    eddddy
    • #8
    • 5th Dec 17, 3:27 PM
    • #8
    • 5th Dec 17, 3:27 PM
    I thought the purpose of the 50% mortgage was to pay out the other future beneficiary early?
    Originally posted by kingstreet
    That's what I would have assumed.

    With the potential benefit that IHT may be avoided (assuming that MiL lives another 7 years).

    But MiL would lose the rental income, which she may be relying on.
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