Buying house off grand parents question...

pjjafc

Morning,

Being a young couple we are looking at buying our first home and cant afford a mortgage for a house in our area as the house prices are very very high.

Now the grand parents own a property that they are willing to sell to us at a reduced rate (property is worth about £300,000 and they said they will sell to us for £200,000) However we are being told we cant do this as they have to sell at the properties real value and is seen as inheritance and can be taxed 40%??? Is this true?? I know nothing about this game and any help would be great!

Many thanks

JonnyBravo

They can sell it to you at whatever price they like.
There may be inheritance issues though if they die within 7 years of making such a "gift" to you. Depends on how much their estate is going to be worth.
Who are the beneficiaries of their wills?

RAS

You also need to check out the depravation of assets rules. If either of your grandparents needs care in alter years, it willl be assumed that they recieved the full £300,000 for the house when calculating any state support for residential care or benefits. Ditto for any other benefits.

pjjafc

Sorry another question..

Seeing as the Conservatives are bringing in no inheritance tax for anything under £1m does that mean anything??

Thanks for your help!

terryw

There is also a potential problem with Capital gains tax from your grandparents' point of view if this is not their principal private residence. Grandchildren are "connected persons" and the value of the house will be the market value not the selling price.

gauly

Even under this government the inheritance limit is over £300k each - and for a married couple any part you don't use can be transfered to the other partner. Unless they have significant other assets that take them well over £600k then the inheritance tax isn't going to be a problem. As RAS has mentioned, it is nursing care home fees that will be your main problem. I would still go for it - at worst I guess you would have to sell the house to pay the fees but you would end up no worse off than you are now!