Buying a house for a relative

Darthdoug

My sister has some surplus cash and wants to use it to buy a property for our parent. Does anyone have experience of doing this and what are the potential problems?. The property is £120,000. She is unsure of the best way round the potential purchase of the property with tax implications, giving the money as a loan, whose name it would have to be in etc etc. I would be grateful for any info / advice people may have.

kidmugsy

If your sister owns it but your parent lives there, then when it's sold your sister will be exposed to Capital Gains Tax - which won't matter if the gains are non-existent or small. If your parent pays her a rent, that'll be subject to income tax (after subtracting expenses).

I suppose your sister could lend your parent the money to buy the property, so that it's owner-occupied by the parent. There would then be no CGT and the capital gains, if any, would belong to the parent.

The loan could be secured by a charge over the property - she should see a lawyer about that.