Would you let a family member buy a house in your name?

kanga12_2

Help please!

My gran sold her house last year and moved in with my aunt. She now wants to purchase a buy to let and will be a cash buyer. However she wants to buy the property in my name- not to try to avoid inheritance tax ( she is under the threshold) but because she does not want the hassle of having a property and she wants to safeguard her investment/ finances from certain members of the family- so if in my name- legally it's not hers...

I know the let will be managed by the agent/aunt so my involvement will be as the owner of the property only.

I'm just not sure if this has any impact on me in regards to tax or whether I could financially be affected if my situation changed ( I have a mortgaged house with husband and young family), as although I would own the property (named legal owner ) morally it's not mine so I would not lay any claim to anything or could not take anything from the house. I really want to help as it's my nan- but you can't predict the future and my worry is that if my situation does change - I would be seen as owning two properties (one mortgaged) and be seen as better off than I am!

Any advice on how this would affect me or things I would need to clarify, institutions I would have to inform?

Thanks

notanewuser

You can't own the house and not own it. If buy to let she'll have to pay rent to live in it. Whoever it is let to you will be the landlord and will have to run that business, declare the tax etc.

It will count as your house for benefits purposes.

This is so so messy. I wouldn't go near it.

notanewuser

kanga12 wrote: »

Help please!

My gran sold her house last year and moved in with my aunt. She now wants to purchase a buy to let and will be a cash buyer. However she wants to buy the property in my name- not to try to avoid inheritance tax ( she is under the threshold) but because she does not want the hassle of having a property and she wants to safeguard her investment/ finances from certain members of the family- so if in my name- legally it's not hers...

I know the let will be managed by the agent/aunt so my involvement will be as the owner of the property only.

I'm just not sure if this has any impact on me in regards to tax or whether I could financially be affected if my situation changed ( I have a mortgaged house with husband and young family), as although I would own the property (named legal owner ) morally it's not mine so I would not lay any claim to anything or could not take anything from the house. I really want to help as it's my nan- but you can't predict the future and my worry is that if my situation does change - I would be seen as owning two properties (one mortgaged) and be seen as better off than I am!

Any advice on how this would affect me or things I would need to clarify, institutions I would have to inform?

Thanks

Quoted, just in case.

Yorkie1

Your gran will have to (technically) give you the money and then you buy the BTL.

You will be liable for income tax on the rental income and thus fall (I think) into self-assessment territory with all the extra deadlines. You will be liable for capital gains tax upon sale (subject to allowances etc of course).

You will be legally responsible for gas safety certificates, deposits, authorising repairs (or otherwise), etc. Although you could delegate parts of this to the agent / your gran / aunt, if anything goes wrong then it's on your head. If you needed to evict a tenant, it's you that would need to go through that stress.

See here for a list of what LLs have to do:
http://forums.moneysavingexpert.com/showpost.php?p=41160642&postcount=12

You are right that the property forms part of what you own and is thus at risk if your circumstances change e.g. financial difficulties, divorce (marital assets split), death (sorry). Therefore your gran's investment is not guaranteed to be safe.

If you were to need to claim means-tested benefits then it would impact on that.

Will your gran need to claim any means-tested income or care benefits in the foreseeable future? If so, she will be treated as if she still owns the cash - search for deprivation of assets.

I agree with notanewuser - this has bargepole written all over it.

Pixie5740

If she wants to safeguard her money wouldn't it be easier to get her will up to date and sort out a power of attorney for the future in case she gets dementia or ends up in some other situation where she is no longer capable of dealing with her own finances?

What if you, the legal owner of the property pop your clogs before your gran does, where would that leave her?

Doozergirl

You probably need a chat with a tax adviser or gran needs to set out her will properly.

kanga12_2

I'm very grateful for your comments- seems like I would be getting myself into a tricky situation which I have no time or energy to try and fight through! I just assumed (naively) if it was managed by someone else I would not really have to get involved- did not even think of tax liabilities or implications!! I guess I have to have a difficult conversation with my gran

BigAunty

Under the current benefits system, it is possible to qualify for tax credits despite owning a second property if the rental income is low enough. In the proposed move to the Universal Credit system (if it ever happens), tax credits are going to be scrapped and the typical means tested/capital tests (that now apply to things like Income Support, income based sickness/unemployment benefits, council tax discount and housing benefit) will be applied.

This means second home owners won't qualify for a similar sum of benefits under UC - many households have working tax/child tax credits as one of their main sources of income. If you lose your job under UC, your family will struggle.

Also, check out Age UK for their fact sheets on Deprivation of Assets and care homes, how your gran could be potentially storing up trouble by concealing her capital if she ever requires means tested care or a residential care home. They reckon councils, due to cuts, will start getting a lot tougher about recovering properties that get transferred into relative's names.

xylophone

I can't see any point in such an arrangement.

Your grandmother can buy the property in her own name, make sure that she is fully conversant with a landlord's responsibilities and make sure that the rental income is paid into her sole account.

She should make sure that she understands her income tax position.

She should see a solicitor and make a will that reflects her wishes and put an LPA in place for the future? https://www.gov.uk/power-of-attorney/overview

specialboy

If its in your name and you get divorced then your husband can lay a claim on it too.