Buying half a house vs gifted deposit

getmore4less

One thing to watch (as she has not lived there for 10 years)

if she disposes of the property it will need a CGT assesment (which may be zero).

Thrugelmir

bigoll wrote: »

On the care front, she's in a private care home funded by her significant savings. Part of the reason for us buying her house is that those savings are running down so she needs to free up some capital within the next year or two to keep paying the care home fees. Presuambly the sale of assets wouldn't have any impact.

At under value. Most definately they would. As £350k is a significant sum.

Yorkie1

Thrugelmir wrote: »

At under value. Most definately they would. As £350k is a significant sum.

As Thrugelmir says, she will be intentionally depriving herself of £350K of assets - you need to google deprivation of assets to understand this fully.

holly_hobby

It will be nigh on impossible for you to secure any residential mortgage whilst granny remains on the deeds - as has been explained all owners must be party to the mge, in regards to possessionary rights of the lender, The fact that she is 100 (remarkable lady), she is already well in excess of the maximum redemption age of most lenders (75) never mind the entry age !

There are only a couple of lenders I can think of with no upper age limit (national counties being one, which your broker may mention), but given the unusual issues with the enquiry, they may decline to lend.

As mentioned, if granny stays on deeds and you manage to find a lender, this is an unencumbered rermortgage with a simultaneous transfer of equity into your own and GFs name - both of which discount any fee free remortgage deals, and will exposue you and GF to SDLT on the value of the transferred share (if she sells it to you completely then SDLT will be on the full market value not the 350k), to which a tenants in common arrangement could possibly be used to mitigate the exposure, but would mean on grannys passing that there is no automatic tsf of equity to yo & GF, so it would need to be beqeathed via her will (otherwise the laws of intestacy will determine to whom her share goes, which may not be your GF).

Deprevation of assets - relevant only if granny or her reps apply for any state funding assistance to her residential care home fees.

IHT - if sold under value, the gifted element (as she doesn't reside there) will be subject to PET regs.

In my opinion, and given the value of grannys estate, you need the advice of a HNW chartered and tax adviser, plus the assistance of a mge broker whom knows their stuff and understands what you are trying to achieve (whom your chartered adviser may recommend), and of course a solicitor to ensure the wills and arrangements of everyone (including any consideration for a LPA for granny), is proficiently dealt with.

Of course if there are other family members whom may be affected by the proposed arrangement with Granny, it would be beneficial to include them in the loop on this, to save any family disputes at a later stage.

Hope this helps

Holly

bigoll

getmore4less wrote: »

If you buy it for £350k thats the SDLT

Whats she going to do with £350k at 100.

If she has other assets and enough to pay the IHT bill and expences why not just gift the lot and save the SDLT completely

There seems to be some disagreement about this, i.e. whether SDLT is payable on the market value or the purchase price!

Whatever she wants - it's her money. But in the main it will continue to fund her private care home.

There probably won't be any IHT to pay given the combined allowance which the lawyers sorted some years ago; but that's down to them to clarify.

Thrugelmir

bigoll wrote: »

There seems to be some disagreement about this, i.e. whether SDLT is payable on the market value or the purchase price!

.

Market value.

For obvious reasons.

bigoll

Thrugelmir wrote: »

At under value. Most definately they would. As £350k is a significant sum.

Don't see how it would make any difference - she doesn't get any state support and pays for everything out of her own pocket, always has.

bigoll

Thrugelmir wrote: »

Market value.

For obvious reasons.

Maybe, but HMRC also gives confusing advice:

"If the property is received as a gift there's no SDLT to pay, so long as there's no outstanding mortgage on it. But if the person who receives the gift takes over some or all of an existing mortgage, then SDLT may be payable if the value of the mortgage is over the SDLT threshold".

But it also says SDLT is payable on the purchase price which should reflect fair market value. Who are the government to dictate the supposed price a private person sells their private assets for? One for the lawyers to sort out I reckon.

Thrugelmir

bigoll wrote: »

Maybe, but HMRC also gives confusing advice:

You can't buy it and be gifted it at the same time.

By default any consideration makes the transaction a purchase.

Thrugelmir

bigoll wrote: »

- she doesn't get any state support and pays for everything out of her own pocket, always has.

And is there sufficent funding for the remainder of her life?