What are the possible consequences?

Lolo123

Hi,

Long time lurker, was wondering if you could help me with a problem or fairytale, please?

Mum is selling her property to pay off interest only mortgage. She wants to give me and my brother 150,000 each. With my money I would like to buy a property, but she would live with me.

I already have a flat, which I would rent out and change the mortgage to buy to let or get consent. I have intentions of selling flat in three or so years.

House prices are high, so my brother says that I should also take his money and use to buy the property. I would pay him back in three years when I sell my flat (He is happy with that, says that he does not need money). I'm not able to sell flat for now due to various reasons.

What are the possible issues?
Will they give me a mortgage using so much money gifted from mum, and she lives with me?
Can I just give my brother 150,000?
Are there any taxes?
Anything I haven't thought of, which is probably everything..
Not trying to dodge taxes or do anything dodgy, just looking to buy a nice house for me and 16 yr old son, with mum living with me. My flat is too small for all of us.

Thanks!

Lolo

RAS

How old is mum?

What income does she have?

Does she claim any means-tested benefits or is she likely to do so any time soon?

Google deprivation of assets.

Lolo123

Hi,

She is 64 and she works full time. No benefits. We have suggested that she use the money to buy a property, but it would have to be further out which is what she is trying to avoid. She obvs can't get a mortgage due to her age.

She works full time and has no bills apart from current mortgage. She also has her pension.

She is in good health, and we are not trying to deliberately hide her assets or anything like that.

franklee

So mum has 300K to spend on a property and presumably you have money/mortgage to top that up to get a suitable house? Suggest you buy the house tenants in common each owning a share to reflect the amount you put in. That would give you the home you want for all three of you.

If she gives you the 300K and still expects to live in the property I'd say that's a gift with reservation so isn't going to help you hide her assets.

If she gives you the 300K with no strings attached then she would have no rights to stay with you. She will risk being homeless or forced to private rent on her income. If you agree to let her live with you permanently then it's back to not being an outright gift.

Why would you want her to take that risk unless you really are trying to hide her assets?

No idea why brother is getting anything if he's not contributing towards the house.

Can she stay put for the three years until you can sell the flat and then you can buy as tenants in common?

Pricivius

On top of the issues raised above, you need to think long term when making arrangements like this, for example:

- What if mum finds a new partner and moves him/her in?
- What if you find a partner and move him/her in, and his/her three children? Or you have more kids of your own?
- What if you remarry and then divorce 10 years down the line and your new ex demands his share of the house so you have to sell up and give him 50% (of mum's money)?
- What if your brother's circumstances change and he needs 'his' money in 6 months' time?
- You also need to think of wills: if you die intestate, your son will inherit everything and can kick your mum out.

It doesn't make sense for your mum to give away her money when she could buy with you as tenants in common. The above examples are just some potential pitfalls...

Lolo123

Ok, thanks! Really not trying to hide her assets!

I think she just wanted to give me and my brother equal money, and its me who wanted to buy a house with my share, and was happy for her to move in. I was an idea that she liked so that she would be 'carefree' as she put it.

Tenants in common - does that mean she can use all her money as a deposit, and I top it off with a mortgage? I have no cash to match what she would put in. How do we work out percentage of house owned?

We could also wait for three years, but I think she wants to live her life full of cruises and chocolate cakes. She would have some money left over after she gave me and my brother some to 'do as she pleases'.

My idea is that she sells and buys somewhere cheaper or extends her interest only mortgage on current house, but she doesn't like the idea of paying £600 a month on a mortgage that will never get repaid.

Lolo

tea-bag

There is nothing wrong with you mum gifting you £150k you may get stung buy the 8 year rule if she goes into care. As for your brother make it formal agreement could save loads of hassle later

EG I will pay (BROTHERS NAME) £150k upon sale of (NAMED FLAT) on or buy the date of (AGREED DATE)

Then list any terms interest fees etc.

Signed both parties.

This will save any problems later also if you die in the meantime he can get his money back.

Lolo123

I think the seven year rule goes out the window if she lives with me because she is still benefiting from her gift - I think. Everything is so confusing!

I think its easier for her to use the money to buy herself a property, and then she can dream of Cruises and eat cheap chocolate cake.