Part Ownership of Parent's House?

efunc

Hi all, not sure if this is the right section, or even what it is I'm trying to ask(!), but here goes:

I'm currently living in the family home with my two parents. I'm planning to move out soon and have been saving a mortgage deposit. However, about 3 years ago I decided to lend my dad about £55k to clear his debts and overdrafts and this leaves him mortgage free, but being retired I don’t think he’ll ever be able to pay me back. I have a brother who owns his own house and also lent my dad another £15k for the same purpose.

My query is, given that this £55k is a completely informal arrangement with no paperwork to back it up, is there anything I can now do to have this somehow recognised as security against a house purchase of my own? I’m guessing not, and I already have a large deposit and don’t need the £55k factored in, but I’m also concerned in case my loan get’s ‘lost’ or forgotten about in the future.

My parent’s house is probably worth around £500k or so, at a rough guess. There is no formal arrangement for this loan, but there’s something of an understanding between myself and my brother that we could deduct the money from the house after it’s left to us before sharing out the remainder – all fine, but I doubt we’d ever sell the house in the first place, so the money will remain locked up!

My final concern is that if me and my brother ever did inherit the house and sell it we would have to pay inheritance tax on it. This means I wouldn’t be able to retrieve my £55k as I would be taxed on it again. Is there any way I can protect myself against this?


Thanks!

getmore4less

Get the loans documented so they can be debts against the estate.

You could look at charges on the house.

IHT has a £650k joint nill rate band so house will not create a IHT charge on its own.

efunc

getmore4less wrote: »

Get the loans documented so they can be debts against the estate.

OK, thanks. How does this work? Is it a formal legal process like Declaration of Trust?

getmore4less wrote: »

You could look at charges on the house.

How does that work?

IHT has a £650k joint nill rate band so house will not create a IHT charge on its own.

I'll have to investigate. I had no idea there was no inheritance tax below £650k!

efunc

Any other advice out there?