Buying a flat from my parents

Mel51_2

I am 51 years old, divorced and renting a flat owned by my parents. I would like to buy the flat, is it possible to buy the flat from my parents on a monthly basis i.e. turn the rent into a mortgage?

SuzieSue

Is there a mortgage on the property? If not, then your parents would make you a joint owner and draw up a declaration of trust with a schedule which would change each month as the percentage you owned increased.

I assume that your parents currently declare the rent that you pay to HMRC? If so, it would be best to ring them up to explain what you are doing so that they don't investigate why the rental income has stopped.

There will probably be other tax implications such as capital gains tax if the property has increased value since your parents bought it.

Fire_Fox

Take legal advice on becoming a joint owner with your parents if either have other children, I was advised it makes things messy with inheritance. As SuzieSue says you need to consider the capital gains and income tax position too, but I don't think what she says makes any sense. Whilst your parents are still on the deeds I suspect at least some of any payment you make would be classed as rent or in lieu of rent by the Inland Revenue. What she is suggesting is closer to 'staircasing' with shared equity properties or perhaps tenants in common. Lastly be sure your parents are protected from the deprivation of assets issue if the need to go into a care home in later life. Lastly you need to check the long lease, depending on the wording a staircasing type arrangement may not be permitted.

IMO you really need specialist legal and financial advice.