Advice please

biblee

Hi
I was hoping that someone could give us some advice. Sadly my grandfather has just passed away. My grandmother has now decided that she doesnt want to live in their house anymore, and has thus suggested that she gives me and my brother some of our inheritance now in the form of her house, but that we then buy her a smaller a house. Her house has been valued at 230 000, and the house that she wants to buy is 140 000 (the rest of her estate is probably about 130 000). My brother (dear of him!) is happy to let me and my OH live there as I am expecting and will just have his stake in the house for the future. Our plan was that she would sign the house over to me, I would then remortgage the house for just over 140 000 (needs some slight alternations etc) to buy her new house. Would all this be ok, would we need to get to get things drawn up by a solicitor (more in terms of inheritance tax etc rather than agreements). Is there a better way of doing it? Is there something that I am missing?

If this is on the wrong board please feel free to move.

Many thanks in advance

Ian_W

Hi biblee & welcome,
There is potentially an issue regarding inheritance tax so I would have a look at the Cutting Tax thread, lots of info and advice about IHT, and possibly post again there.

The potential problem and I'm no expert so I don't know the answer is whether by giving you her current house on the understanding you will buy her new one is a gift "with reservations" in which case it will still count as part of her estate when she dies. If it isn't, provided she survives 7 yrs from the gift it won't be part of her estate. There are also issues if she needs long term care so it is quite complex and in the end you may need specific professional advice but try the other thread first.

If you go ahead you will need to think about how the property is split. If your bro owns 50% on the deeds he will need to be on the mortgage. If you sell in the future he will be entitled to 50% of the proceeds but you'll be the one who has paid the mortgage and probably maintained/improved the prop so an agreement thro' a solicitor as to how this will work fairly to both of you is needed at the start.

It would be far simpler if she sold her house, bought the other and gave you each half the money left over. That is a gift w/o reservation so there is only the 7yrs to worry about and you could use the money as a significant deposit on your own place w/o the potential to cause problems between you and your brother.

HTH & BoL.