Purchasing a family home.

jimbush

Unfortunately my mum died a few years ago. The house my parents lived in is now too big for my father alone and he asked did we (me and my wife) want to purchase it.

The agreed terms of the purchase were fair for the family, but slightly complex and here lies my query. We had the property valued at £240000, which we agreed to split 3 ways as a form of inheritance, therefore I would pay my dad £80000 and my brother £80000 and I would receive the property.

How can I give the required sums to the relevant parties wihtout getting into some kind of trouble with the taxman?

1. If I pay dad just £80000, I avoid stamp duty, but the property is clearly worth more, can my dad sell me a property at such a low value to market valuation? Can I then give my brother £80000 legally?

2. Do I give my dad £160000, pay stamp duty, and let him give my brother £80000 as some kind of pre-inheritance? Or does this bring up a problem as of 1 above where gifting £80000 is a no no.

3. Is there some law where my with my mother dying we can inherit part of the estate.

My dad has now purchased a smaller, manageable house, and the time is coming to sort this out.

Thanks in advance.

irishcol

Would you need a mortgage to buy the place?

If not, then the best option might be to get the house transferred into your name (i.e. you don't buy the house in the conventional way), then look with an IFA at the most tax-efficient way of transferring £80k each to your brother and father over the next few years.

snid

I wouldn't have thought there was a problem as long as you did not have a written contract. Then it might be construed as avoiding stamp duty.

As long as your family trusts you, then buy the house for £80K and give your bro £80K.

There could be an inheritance tax issue if your dad dies within 7 years.

jimbush

I have a mortgage on my current property, this mortgage would be transferred onto the 'family' home.

We are a close knit family hence trust does not come into it.

Regarding paying soemone £80000 is there a tax efficient way of doing this to a sibling? I've read about giving money and the limit seems to be £3000.