buying my mums house

lynx636

hi there, i am at a point where a mortgage has been accepted for me to buy my house from my mother, for the market value of the property. but once i have bought the property our intentions are for her to remain living in the property with me for a year or two, until she gets on her feet and finds another place to live. while here she will pay her share of the bills.

however i have read a few things on the internet that say this may be illegal and i may incure some sort of tax or something ???

the value of the propery is around £65000

ill be buying it for £60000

and then my mother will be paying half the bills.

i cant see any issue with this but the internet tells me otherwise.

if theres anyone in the know that could give me some advice, i would very much appreciate it.

thank you

holly_hobby

Have you disclosed to the mge lender that your Mother will REMAIN resident post completion ?

H

lynx636

yes i have told them, but i was quite vague with my estimates about how long she would remain here, as neither of us really know

getmore4less

lynx636 wrote: »

i cant see any issue with this but the internet tells me otherwise.

Give us a clue.

lynx636

i think it was called inheritance tax, but i dont see how having my mother as a lodger would be different to any other lodger. but i may be wrong

somethingcorporate

You'd come nowhere near the IHT threshold with a house worth £60k, the individual limit before tax is paid is currently £325k.

lynx636

i was not aware of that, thank you

holly_hobby

lynx636 wrote: »

i think it was called inheritance tax, but i dont see how having my mother as a lodger would be different to any other lodger. but i may be wrong

It is solely in respect of the point that the lodger (in this case Mum) was the property owner, who sold the property to you, yet still resides there as her primary residence .... thats the issue with many, in fact all, residential mge lenders.

Hope this helps

Holly

holly_hobby

lynx636 wrote: »

i think it was called inheritance tax, but i dont see how having my mother as a lodger would be different to any other lodger. but i may be wrong

You're referring to a gift with reservation .. .which wouldn't apply anyway if you paid the full market value for the propety.

But, in essence thats the issues you have read about, where parents "sell" the propety to children, for a preferential purchase price (termed as a gifted deposit), or gift it totally, yet remain resident there. It very broadly means that in such cases and for IHT purposes, the property remains classed as their estate for IHT calc purposes, with a possible liability if their net estate exceeds the nil rate threshold.

Hope this helps

Holly

lynx636

so am i right in thinking that my mother cannot live here as a lodger after i purchase the property from her?

ViolaLass

holly_hobby wrote: »

It is solely in respect of the point that the lodger (in this case Mum) was the property owner, who sold the property to you, yet still resides there as her primary residence .... thats the issue with many, in fact all, residential mge lenders.

Hope this helps

Holly

Even if it also becomes the primary residence of the person who has bought the house?