Being gifted a property

Annisele

Chapperss wrote: »

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.

So, your plan is:

House currently worth £400k. You want to buy it for £200k, and use the other £200k as a gifted deposit.

In two/three years, you want to sell the house back to your Mum for £200k - and gift the rest of the equity back to her.

Is that right?

If so, you're effectively talking about giving your Mum an option to buy the house for £200k at some point in future - and I can't see any mortgage lender being happy about that.

Chapperss

Why would I tell them?? I would take out a fixed term and at the end she would buy it off me paying off the remaining mortgage. If they are getting their money they are happy. She wouldn't be using a mortgage to buy it back off mr but the cash from selling the second house.

getmore4less

Seems to be very complicated just so you can build a house on the plot to sell.


What taxes do you think you will avoid by doing this.

fawd1

Why doesn't your mum just gift you the plot of land with planning permission on and then you get a self build mortgage and build a home for yourself? If you're saying you can get a £200k mortgage then it shouldn't be a problem if you already own the land and it has planning permission on it. And as you say, if it overruns then your mum has some extra cash she could loan you. If paying the mortgage and rent is a problem then maybe your mum would be happy to let you stay in her house for the duration of the build?

Chapperss

getmore4less wrote: »

Seems to be very complicated just so you can build a house on the plot to sell.


What taxes do you think you will avoid by doing this.

The idea is to keep the family home in the family. I know she could just sell it and build herself but who in their right mind would buy a house next to a building site. She could also sell the whole lot plot included but the return would not be as great as building it herself.

In terms of taxes - this is exactly why I have asked the community to help guide me on where we might fall prey to taxes which we could otherwise avoid by taking different action.

fawd1 wrote: »

Why doesn't your mum just gift you the plot of land with planning permission on and then you get a self build mortgage and build a home for yourself? If you're saying you can get a £200k mortgage then it shouldn't be a problem if you already own the land and it has planning permission on it. And as you say, if it overruns then your mum has some extra cash she could loan you. If paying the mortgage and rent is a problem then maybe your mum would be happy to let you stay in her house for the duration of the build?

Yes looked in to this. The broker advised that its complicated as money is only released in stages and for more to be released the property has to be at a certain value which is reassessed each time you need funds releasing. Should you need more funds and the bank do not deem the property to be at a stage to recoup their costs/money they will not release funds and we will need to find the money elsewhere. So I prefer the option to have most of the funds in the bank at the start.

It is a lot simpler doing it that way i admit so should perhaps research this more.

getmore4less

You might have been better saying what you want to do.

we want to build another house to sell in the garden of my mums house(no mortgage) and keep the current house with a smaller garden

How can we raise raise the money and avoid any taxes.

Chapperss

Well darn me and here was me thinking more information might be helpful with something like this.

getmore4less

It might have done but its seemed to hide what you were trying to do.

I would start with the if we had the money, built a house in the garden and sold it what would the tax implications be and what steps would avoid that.

The issue then becomes are there connected transaction that try to evade that tax or just avoid it!

Annisele

Chapperss wrote: »

Why would I tell them?? I would take out a fixed term and at the end she would buy it off me paying off the remaining mortgage. If they are getting their money they are happy. She wouldn't be using a mortgage to buy it back off mr but the cash from selling the second house.

The problem (as I see it) is that when you take out your mortgage, you're relying on a "gifted" deposit from your mother. But the "gift" isn't really a gift, because it has strings attached - and those strings might give your mother an interest in the house while you "own" it. If your mother does retain an interest, the lender won't want to lend.

If she genuinely does gift the equity to you, that's OK. But if you then keep the equity and refuse to sell the house back to her (at £200k or at all) then that's OK too - the house is yours. That leaves your mother pretty vulnerable if she actually needs that £200k.