Question on fathers house and possiblility of releasing money

Annisele

I'm not convinced that you or your father really understand the implications of the plan you're suggesting. If my Dad came up with this, I'd just refuse to take his money. (Unless I was destitute - but in that case I'd probably be tapping the mortgage free brother instead).

Do you or your siblings actually need any money at the moment? If so, there might be other ways to get it. If not, can't you just tell your Dad you're very grateful for the gesture but no thanks?

TBagpuss

00ec25 wrote: »

this is nuts

at the moment your father does not have any cash but wants to pass out some "inheritance" in the form of cash money to the whole family now

your plan is that father gets the cash by selling his only asset and then gives away the cash

so your brother is effectively buying his share of his own inheritance,
brother will then have to pay interest on a mortgage secured on a house in which the original owner continues to live which means he will be lucky to get a mortgage at all as lenders hate that scenario and charge accordingly.

the rest of the family then get the cash that brother has borrowed because father gives out the money brother has paid over for brother's share of the house,

at the same time brother is now liable for capital gains tax on his share of the father's property but brother would have inherited it without any CGT liability when father dies anyway

It would be cheaper in terms of interest costs on a loan for brother to simply mortgage his own house and give the money himself direct to his siblings and leave father out of it because father has not given away anything - your brother has paid for it himself

Well, brother would be buying an asset which he might otherwise inherit a share of, but that is up to him. It does have disadvantages for brother, who would be paying interest etc. Certainly him remortgaging his own house, and then using cash to buy a share of Dad's property simplifies the issues of renting to a connected person.

A tenancy in common with a tenancy for life (or until he ceased to occupy the property) would protect Dad but leaves brother with potential CGT liability . Both dad and brother would need to get good, separate advice.

Another option might be for brother to give dad a loan, secured over Dad's property, rather than actually buying him out. I think that would avoid the CGT risk but they would need to come to an agreement over whether the loan would bear interest etc.