Buying the In-Laws House

Kernow_3

Am after some help/information. For one reason or another, I am looking to buy my In-laws house. Is there anything I need to be aware of or anything special I need to be doing. Any help appreciated.

silvercar

Where are your in-laws going to live? I hope your not making them homeless!

Seriously, the issues when buying from the family are that if any inheritance issues arise in the next 7 years the inland revenue can undo the transaction for IHT purposes. This can cause problems if you are paying less than market value for the house.

Also, if elderly people need to go into care they can be expected to contribute from their savings (which will be large if they have sold the property). Local authorities can get difficult if the property has been sold at less than market value and this causes there to be no money for care.

Look on the age concern website for details of this.

If you are buying the home and they are still going to live there you will have capital gains tax issues when you come to sell.

Kernow_3

Thanks for that. The plan is to buy the house for approx 60k, where the market value as is, is probably 97k (needs a bit of work doing to it). They will carry on living there and in due course we will buy bigger where we can move everyone into one house, as my father-in-law is disabled. The cash we pay them helps them out as it clears their mortgage and any worries of paying it. They want to pay us rent on the property but at a lower amount than what they pay for their mortgage at the mo.

Just concerned that it may cause them problems rather than us as people I have spoken to have told me that they will be liable for taxes etc as they are selling at a lower amount than the market value, but I don't see how it is very different from me offering someone else 30k less than their asking price. But being a newbie I just wanted to check.

silvercar

If your getting a mortgage you will need to declare that your not living there and probably get a buy-to-let mortgage.

I don't see what problems it causes them unless they need to go into care.

You will have a tax liability on the rent you receive but you can put any expenses you incur (including mortgage interest) against the rent money.

You will have a possible gapital gains tax liability on the sale of the property, reduced if you live there for any length of time.

System

Is your wife an only child? If not it could cause problems after her death with a sibling.

Have a read through here, although Jocks case is slightly different, it just shows the tension that buying a a family members house can cause.

Also read here.

margaretclare

I think it does cause problems for the future if they sell their house to you but continue to live in it.

This has been discussed over and over again.

Aunty Margaret

Kernow_3

Thanks for that, makes things a little clearer. It maybe that my wife and children will live there for the short term but I think it will still have to be buy to let, which is no problem. Hopefully there shouldn't be any problems long term with them still living there though the mother in law is an old battleaxe (LOL).

Again thanks for the info