Protect Interest in Property

starnails

My parents released some equity in their property a few years ago and now want to buy it back with the help of me and my brother. (The only two siblings).
Although my parents have made wills we (my brother and I) want to protect our investment to ensure we get the capital back on the eventual sale of the property and the money is not used to possibly cover care home costs.
Our investment will go directly to our parents who will complete the transaction with the insurance company.
We have thought about giving the money as an interest free loan or getting a legal document drawn up stating we have a % stake in the property.
Has anybody any thoughts on how best to do this, although I know we need advice I am unsure who to go to solicitor or financial adviser. Any thought /comments will be much appreciated.

xylophone

In such circumstances, I would see a solicitor and make sure that a formal, witnessed loan document was drawn up.


While the loan is to be interest free ( and presumably not repayable until the death of the second to die, or sale of the property), it might be possible for the loan agreement to be structured so that the capital repayable is linked to inflation?

Alternatively, the loan could be structured so that any interest payable was "rolled up" until the repayment event occurred? You would need to consider the tax consequences for the lenders ( you and your brother), in this scenario.

I would certainly take professional advice.
http://www.step.org/system_pages/call_to_action_navigation/member_search.aspx?link=header-menu You might find something here?

webmasterpolo

Hi

Advice is a must. Solicitor and possible accountant rather than an IFA I would guess.

If you own a share of a property that isn't your main residence it can be subject to CGT when it is sold if it's made a profit. Bear this in mind with your planning.

-Web

starnails

Thanks for the advice I am aware of the CGT issue if we part own the property. I am currently trying to find a solicitor that will give a free 30 minute consultation. The interest free loan idea seems to be the best option at the moment.

kidmugsy

You and your brother will probably want to arrange a "charge" on the property, assuring you that it can't be sold without the debt being discharged.

starnails

I have now been in touch with a solicitor who has confirmed the only guaranteed way to secure our money is to raise a charge on the property. The interest free loan is not an option.
This will have Capital Gains Tax implications when the property is eventually sold but is a small price to pay for the peace of mind.
Thank you everyone for your help.