Being gifted a property

Chapperss

Had a read through a few posts but still need some more help please people.

Planning on asking my mum to part gift me her 400k ish Mortgage free house and pay her 200K for it with a mortgage of my own. Works out great for me 50% LTV and all that.

Now the idea for this is so she can build a house on the garden which we already have planning permission for and will cost roughly 200k to build (we would separate the plot during the sale). She will then live there for two years before selling. Also she will live with her partner round the corner for the 6 or so months it takes to build so wont be living with us.

I'm expecting her to live a lot longer than the 7 year threshold so think we have covered everything from a CGT side but would like any advice from those that know on anything i may have missed?

Also as a side question what would happen after she has sold the new house she wished to buy her original house back from me?

Cheers

Mojisola

Chapperss wrote: »

Planning on asking my mum to part gift me her 400k ish Mortgage free house and pay her 200K for it

anything i may have missed?

Does you Mum want to give you £200k?

System

Will your mortgage lender agree to splitting the property and devaluing the portion that they have/will lend on?

Chapperss

Mojisola wrote: »

Does you Mum want to give you £200k?

Hope so More seriously that is for her to decide and she will fully understand that is what she will effectively be doing.

!!!!!! wrote: »

Will your mortgage lender agree to splitting the property and devaluing the portion that they have/will lend on?

The house would be valued to not include the plot of land. So we will separate the two before getting it valued. Plot will be worth X which will stay in mums name. House will be worth Y which will be sold/gifted to me. Two separate deeds if that's the right terminology.

Wh05apk

Assuming the house with smaller garden still values ok, there are a couple of lenders who might allow this, but definitely one for a broker, otherwise you could spend weeks trying to sort yourself.

Chapperss

Wh05apk wrote: »

Assuming the house with smaller garden still values ok, there are a couple of lenders who might allow this, but definitely one for a broker, otherwise you could spend weeks trying to sort yourself.

Lender shouldn't need to know anything about the plot as that's not for sale or what I am buying. If it matters that there is a building site next door then that's not something I had considered!

Wh05apk

Chapperss wrote: »

Lender shouldn't need to know anything about the plot as that's not for sale or what I am buying. If it matters that there is a building site next door then that's not something I had considered!

I think we have got her wires crossed, I was under the impression hat the value currently was £400k, so presumably losing some of the garden would reduce the value?

getmore4less

Chapperss wrote: »

I'm expecting her to live a lot longer than the 7 year threshold so think we have covered everything from a CGT side but would like any advice from those that know on anything i may have missed?

CGT has nothing to do with 7 year PET exemption for IHT.

Chapperss

getmore4less wrote: »

CGT has nothing to do with 7 year PET exemption for IHT.

Okay, not 100% on which laws apply and how we could fall foul of one or the other so that's why I am asking you lot. Would rather avoid giving money to Whitehall if possible.

Wh05apk wrote: »

I think we have got her wires crossed, I was under the impression hat the value currently was £400k, so presumably losing some of the garden would reduce the value?

I think its been valued at 400 plot not excluded included but you are right it may be less if that's not the case and would obviously affect what my LTV would be if the house was valued at less.

Annisele

Is the £200k your Mum will spend on the build coming solely from the £200k you plan to pay her? If so, that might scupper things - she'd have to be very sure indeed that there weren't going to be any cost overruns.

So far as CGT is concerned, you won't have a problem with it - you'll be living in the house, so you won't have to pay any CGT on the gain. IHT (inheritance tax) might be an issue if your Mum doesn't survive for 7 years.

CGT might be an issue for your Mum, but if the build really does take just six months (which sounds optimistic) I think she'll likely be OK - but I'm not an expert in that.

If she wants to buy the original house back, then you'd agree a price and sell it - just like you would if anybody else wanted to buy it. I don't entirely understand the question there.

Chapperss

Annisele wrote: »

Is the £200k your Mum will spend on the build coming solely from the £200k you plan to pay her? If so, that might scupper things - she'd have to be very sure indeed that there weren't going to be any cost overruns.


If she wants to buy the original house back, then you'd agree a price and sell it - just like you would if anybody else wanted to buy it. I don't entirely understand the question there.

Heya thanks for the reply.

Shes quite cash rich but just not to the sum of 200k so we would be prudent and make sure we had a reserve fund. 6 months is an estimate and if it over runs even by a year would it change anything? Watched enough grand designs to know what could happen in terms of £ and time.

In buying the original house back I would hope to do it undervalued again with her returning my 200k? This is probably illegal in some way im sure and in any event not tax efficient if she intends for me to have the house/money after she passes.