Right To Buy

Brood

Hi

My grandparents have lived in a council flat for 50 years and I'd like to buy it.

I believe we would be entitled to a 60% discount but I'm not sure of a couple of things.

Do I buy it or do I buy it on behalf of my grandparents - if it's the latter would they then have to get an official will done to leave the property to me?

If they do that would I just pay 'normal' inheritance tax when I come to sell the house and nothing else?

I'm aware that it has to be after 3 years unless I have to repay a percentage of the discount.

Is there anything else I should be aware of, like hidden costs when I come to sell it in the future?

Thanks

silvercar

I believe we would be entitled to a 60% discount but I'm not sure of a couple of things.

The Royal "we"?

Your grandparents may be entitled to a discount to buy their council house. This doesn't generally extend to family and friends.

They would need to buy the property. They could leave it to whoever they like in a will. (Remember wills can be changed over time.)

If they need a mortgage then this would have to be in their names; do they have the income to obtain the mortgage?

Although discounts can be high in percentage terms. I believe there is now a limit on the actual size of the discount in money terms.

If you inherited the house you would pay capital gains tax on the profit on sale if you have never lived in the property as your principal private residence.

The other thing to remember is that, if your grandparents own their home and need to move into care, the local authority could require the home to be sold to fund the care home.

Inheritance tax only occurs if the total value of the estate (including the house) exceeds £285,000.

Brood

Thanks for replying.

There would be no mortgage involved.

To get around the problems regarding CGT and care home I'm thinking along the lines of this: -

If they left it to my mother who did live there then that would get around the CGT problem.

If it stipulates that they can't sell the house within 3 years of buying it does this include transferring ownership to my mum as that would get around the care home problem?

Will this work?

silvercar

If you can't sell you can't transfer. Also I think that local authorities have realised what people do to avoid paying for care and look at recent transactions!

silvercar

Read factsheets 10 and 38 from this website (Age Concern) for more information:

http://www.ageconcern.org.uk/AgeConcern/factsheets.asp