Buying parents house form them ?

Professional

Noh you completely missed the point, obviously your not too bright so I think I'll have a more intellectual conversation with my pillow now. Thanks for coming.

noh

Professional wrote: »

Noh you completely missed the point, obviously your not too bright so I think I'll have a more intellectual conversation with my pillow now. Thanks for coming.

Gota laugh haven't you?

noh

M635 wrote: »

noh... he hasn't actually mentioned 'gift tax' in his post.

0/10 for relevance again.

Perhaps you should read it again?

I will highlight the relevant part for you

Professional wrote: »

.......................
Tax wise - I believe you're entitled to a gift of up to £325k before tax.
...........................

M635

0/10 again, doesn't mention 'gift tax'


Mentions Tax, and mentions gift, and the then goes on to talk about inheritance tax.

noh

M635 wrote: »

0/10 again, doesn't mention 'gift tax'


Mentions Tax, and mentions gift, and the then goes on to talk about inheritance tax.

I will leave it there.

Whether you go ahead with this plan is between you and your conscience.
I suspect you will go ahead as your conscience seems to be non existent.

M635

Problem resolved

M635

Problem resolved

00ec25

M635 wrote: »

lincroft, we don't need a physical cash deposit, eg house true market value £125k, we purchase for £125k, mortgage for £100k, balance 25k is deposit on paper but not physically needed for solicitor/Mort.Co. to proceed, so home purchased for 125k, mortgaged for 100k

ok so now we know the details - you ARE talking about a "vendor gifted deposit", the parents are the vendors and the parents will continue to live in the property (rent free) after it is sold, therefore:

a) it is a (partial) gift with reservation and thus is a special case. Any gift with reservation is outside the scope of the 7 year rule and will never be exempt from IHT - the value of the gift will always be included in the total of the estate irrespective of whether the parent lives for 2 years or 20 years . However, the gift is the value of the deposit, not the whole value of the house, as you will have paid 100k cash for it aganist a full market value of £125k thus confirming that the gift element is only 25K but it is vital you have proof of the integrity of the valuation - this will mean having more than one valuation documented and safest to use the average of 3 valuations. So the IHT liability in the value of the estate will include the 25k gift. I am assuming IHT is pretty irrelevant anyway since if the parents home is worth only 125 to start with, and they have no other money to give away, then the chances of their total estate being above the IHT threshold (650K for married couples) is pretty slim to start with so IHT is pretty much irrelevant

b) parents can gift the 100k back to each brother and that gift IS subject to the 7 year rule - ie parent dies before 7 years the value becomes part of parental estate - the receipient does not pay any tax and IHT only applies to parents estate above the 650K threshold - so again fairly unlikely

c) you will each have CGT on your £33k "investment" in your parents home and this will come back to bite you in the future

the issues are therefore nor ones of tax but practicalities and cost effectiveness:

d) you will be paying a mortgage of £33k each in order to use those funds as a deposit on your own (to live in) home. You will have 2 mortgages running simultaneously and will be assessed for the second one on that basis - amount you can borrow and rate you will be charged will be affected

e) you are certain that you can get a mortgage (between 3 people?) for the property on the basis of a gifted deposit only as this does restrict the number (and competitiveness) of such mortages still available


Conclusion: yes all is perfectly possible, the tax implications are as above. It is not the most cost effective way of doing it but I can understand your parents wanting to pass on money now albeit that its you who are actually paying your own money to yourself through a £33k mortgage

cte1111

00ec25 wrote: »

a) it is a gift with reservation and the 7 year rule will apply for IHT, but given your mother's age (and assuming it is jointly owned with your father so which ever dies first their interest passess to the other) she (or he) may easily outlive that, at which point IHT becomes irrelevant

This is incorrect. A gift with reservation means that even if the donor survives 100 years after the gift, then it still counts as part of the estate for inheritance tax purposes. I agree that this would certainly be regarded by the tax people as a GWR.

OP: How much is your parents' total estate likely to be worth (including the house)?

00ec25

cte1111 wrote: »

This is incorrect. A gift with reservation means that even if the donor survives 100 years after the gift, then it still counts as part of the estate for inheritance tax purposes. I agree that this would certainly be regarded by the tax people as a GWR.

OP: How much is your parents' total estate likely to be worth (including the house)?

yes even as i submitted I realised it was rubbish - I have now amended