Owning Parental Home vs. First Time Buying

Tris28

Hi,

Totally new to this but need a bit of advice, and as I’m learning my way around I hope someone has a bright idea or two.

A few years ago my mother died of cancer, leaving my dad in charge of the family house. Recently we also lost my maternal grandmother as well, and half of her estate is now going to my father in lieu of my mother. My Dad has said that in order to make things simpler when he eventually shuffles off, he isn’t leaving a will (I’m trying to convince him otherwise – head and a brick wall come to mind) and that he wants to use the money from my Grandmothers estate to pay off the mortgage on our family home and then sign it over to my brother and I.

I’m aware that there’s got to be a 7 year gap for it not to be counted as part of his estate, but my question is this: If I agree to having my name on his deeds, will it affect me as a first time buyer when I want to get my own house?

This is important since I don’t want to mess up my future with my partner by agreeing to something, only to find a kind gesture on my dad’s part ends up biting me in the behind with my future living plans with my partner. I don’t live remotely near my father so I’m more concerned about our future home ownership then having to sort out some additional papers in (hopefully) a good few years’ time. I’m not averse to him signing it over when I own a home either, but then how longs a piece of string until that comes about in the current market?!

Any help you could give me would be graeatly appreciated, or if you’ve been in a similar situation I’d love to hear about it.

Thankye folks : )

Tristan

bryanb

I forsee problems if your dad has to go into care at Local Authority expense.

londonlydia

Well, the question is why you're so keen to be seen as an FTB. If its because you want to use the government 5% scheme, then yes it would affect it I think. However, if you are more thinking along the lines of being an attractive buyer when you put an offer in, then what's key is haing no chain below you. Assuming that you don't have to sell your father's place, then this will still be the same case and you can still approach sellers as chain-free. In some ways, I wonder if banks will look on you more favourably for mortgages, seeing as your name would be against some equity to fall back on if needed....

tyllwyd

Also apart from inheritance tax, you have to remember capital gains tax and gifts with reservation of benefit.

http://www.hmrc.gov.uk/inheritancetax/pass-money-property/pass-home-to-children.htm

It might end up being more expensive than you expect.

kingstreet

Tris28 wrote: »

I’m aware that there’s got to be a 7 year gap for it not to be counted as part of his estate

Not if he continues to live in it. He would have to transfer it to you and give up any right of residence, otherwise he'll fall foul of the "gifts with reservation rules" and the property will never leave his estate for IhT purposes.

He'd have to pay rent at market value and that may still not save him from the pre-owned assets rules.

http://www.adams-remers.co.uk/family/wills/pre-owned/

scottishblondie

This is full of pitfalls, as mentioned above. And you would be unable to get any FTB benefits such as any future stamp duty holidays etc. Convince him to make a will - it'll be much simpler in the long run. And it will deal with his entire estate, rather than just the property.