Is this legal, is this possible?

B2B-2008

My mum and dad have put forward a suggestion this morning that I need your advise on, like the title says.

At the moment we live in a flat with good connections to london, I love my flat but we want a family quite soon after our wedding and I can't see us here with a family and we have been talking about buying a house in my mums area which still has goodish london links. My mum wants to move further out into essex, this is a life long dream. She has suggested that we sell the flat and buy a house in the area that she wants to live in (this is an area which I would also like to join her in some day but my london job doesn't permit this at the moment) and we would then move into their house and they would move into the one we have brought. By doing this our mortgage would be a lot smaller so if and when a family came along I would be in a position to cut down my hours at work or if we are really lucky I would be able to be a stay at home mum.

I just really want to know if this is legal. My mum has no mortgage and we would be paying the mortgage on the house that they would be living in until we could move down there full time.

deary65

perfectly legal. Just like buying a “buy to let” only the consideration is in the use of your mothers property. You can explain all this to the mortgage company.

stolt

life long dream to move to essex!!! only joking... wouldn't be looking for a three bed detached house would you? I have one for sale in Rayleigh essex...

only joking.

Nicki

What would happen in the future when you wanted to move out of mum's house though? Would you sell the one she is living in, which is in your name, to fund your new purchase, and thus make her homeless, or would you sell the one in her name and buy a new one also in your name, which would leave you liable for Capital Gains Tax in the future as you would then own two properties and only one would have residence exemption. Last option would be you sell mum's house, buy the new one in her name to keep yourself clear on CGT but when mum dies, you will have to pay IHT on the value of the house you live in (if her estate is over the nil rate band) which could end up leaving you in position where you have to sell it.

I think the plan is sadly fraught with potential problems. I'd take good legal and tax advice before you went too far down the line with it.

real1314

wouldn't it be simpler to buy your mum's house for the price that she would need to buy the "new" house she wants? This way you would not incur any CGT liability.

it would cut out the need to sort out the buildings insurance variance on both properties and would make tax matters a lot simpler for you and your mum.

your route could (?) involve the IR charging your mum CGT on the existing property as she's not resident there, and charging you CGT on the new property as you're not resident there.

it would however involve 2 sales and therefore more fees.

hth

B2B-2008

Thanks for your replies.

Could someone please explain capital gains tax and in what circumstances you are taxed?

The house that my mum would be living in would be ours. We would live in her house just until I can cut my ties with London, i.e. when and if a family come along. She would then sell her house and buy one near ours and we would move into the one we have purchased.

I would love to buy my mums house but I can't afford it. She would love to give it to me at a price I could pay but as I am not an only child I don't want to upset any siblings.

I'm sorry to say her life long dream isn't Rayleigh, its not far enough out!

sanjaymaz

Not sure about the legality of the proposal, but a very cheap conveyancing option based in Essex is http://www.nbmlaw.co.uk/client/index.jsp. Should also be good for any sale/purchase in England and Wales.

Sanjay