Selling part of house

sanvitalia · 19 October 2011 at 11:46AM

Hello, just discovered MSE lately and have spent a lot of time reading, but have not found anything that is exactly what we are considering.

I posted first on the "tax saving" board as CGT and IHT could be a consideration, but Savvy-Sue has suggested I should post my query here too. I will also put it on "house selling/buying" if you think that would be a good idea.

This was my original post.........................

"Hello, new member here. Looking for some advice in a slightly unusual situation.

We own our house, worth about £600k. It is quite big and has an integral flat that my husband's father lived in until he died 3 years ago.

In the future, maybe 5 years hence, we would like to move into the flat and have our son and his wife take over the main house. They only have a small flat at present, but they have had it several years so now have only a small mortgage. No children right now, but hopefully that will change very soon.

Could we sell them half of the house? Then we move into the flat and they have the main house? They might need a small mortgage, or they might have enough with their flat + savings to buy without a mortgage.

How would the 4 of us owning the house together be treated should either of us ever need to go into care? We are only early 60s, still fit, so there is no suggestion of this right now.

And if one of us died, and the survivor later had to go into care, could our LA put a charge on our part of the houser?

We would want this to be their home, with no threats hanging over them, no necessity for them to sell the house to pay for our care. We do have about £50k in savings, but this would not last forever. Plus we would have whatever they paid us for the half house, though we would be looking to make gifts to our other 3 children, and grandchildren, out of this, using our £3000 IHT exemption each every year.

Our wills would leave our share of the house to each other, then eventually to our children equally. Obviously our son and his wife would then have to buy out the other 3 siblings. This should not be a problem for them as they both have very well paid jobs, plus we hope this would be well into the future!

Are there any problems with what we are considering? "

I later added.........................

"We are in Scotland (Edinburgh), so leasehold/freehold does not apply.

The house is detached, but the "flat" is just part of the house, not really separate in any way. It is off to one side, so a door could be installed to sort of divide it off, but the only entrance is through the one front door. There is no possibility of altering this. The "flat" is 2 rooms plus bathroom and kitchen, the rest of the house is 6 rooms plus kitchen and 2 bathrooms.

What we want is for the 4 of us to own the house jointly. They would pay half the market value to us, which would enable us to help our 3 other children with getting on the housing ladder, and let us put aside some savings for grandchildren, assuming some come along!

Really we would all be sharing the house, but we would have our own "bit", our own bathroom and kitchen, so quite a lot of privacy for us.

They would be using more than half of the house, would this make a difference? We just thought it would be simpler if we owned the house equally. We would share the payment of council tax and utilities. And pay half of the insurance, maintenance etc.

We know we cannot give the house to them and remain living there as this would be a "gift with reservation", also it would not be fair to our other 3 children. We would get a proper valuation, and presumably they would need to pay stamp duty on the £300k (assuming today's value) that they would pay us.

The house is in a very nice area, we like living here and do not really want to sell up and move elsewhere. Our son and his wife could not afford to buy the whole house right now, especially as they are hoping to start a family in the next couple of years. Their flat will be OK for a baby/toddler, but not ideal. Our house, which was where we raised our family, would be ideal. And it is in the area that they want to live.

Our other children have moved out of the area, so have no interest in purchasing or inheriting this house. We have discussed this idea with them and they are fine with it.

Our only concern is whether our son and his family's security could be at risk should either of us need care in later life."

On reflection, I presume we could arrange for them to purchase and own more than half of the house if that would be more sensible, especially as we would only be using about a quarter to a third of the actual floor area of the house.

We have all discussed the "living together" bit and feel it will work well as we will each have our own space, so not so much living together as living next to each other. It would not be for everyone, I know, but we do all get on very well.

Any advice appreciated.

[Deleted User] · 6 November 2011 at 1:18AM

you need legal advice on this complicated issue

kidmugsy · 24 May 2012 at 11:53AM

In England, a property can have up to four owners. In England you could own as "Tenants in Common". In Scotland you'll have to check. Although most people I know who've used both think Scots Law generally superior, it won't be universally superior.