Can we move into my mother in laws house and she move into ours?

kate020385

MarkBargain wrote: »

What about if your mother-in-law needs a nursing home in future? Isn't there a risk the state would require the sale of her £400K house to pay care costs, despite you living in it?

This is what worries me about this plan! you can gift a house and after 7years if it has not been needed for this reason then after that 7 yrs it can no longer be touched. but that involves her giving us the house which would make it no longer hers. this takes us back to the issue of her having no assets and no money!

laidbackgjr

You also need to consider if your MIL isn't living in the property then any value increase will be in scope for Capital Gains Tax.

There are a number of ways to achieve what you want, but none of them are very financially astute or easy to achieve. You'll have difficulty getting a mortgage to pay for the property your MIL will live in rent free, both properties will be in scope for Capital Gains Tax. You'll need to spend money complying with legal landlord requirements each year.

kate020385

Mojisola wrote: »

Would you get a mortgage on a property that you aren't going to live in when you're going to sign paperwork to say that your tenant cannot be forced out?

Well exactly! Arrgghhhh!!!! every solution presents another issue!

franklee

MarkBargain wrote: »

What about if your mother-in-law needs a nursing home in future? Isn't there a risk the state would require the sale of her £400K house to pay care costs, despite you living in it?

Agreed.

Should MIL need to call upon the asset how will she do that without upsetting the living arrangements of both families? The nub of the issue is that the OP can't afford to buy MIL's house which won't be helped by them living there as property prices rise. So how will they buy MIL out when she needs the money? If the OP can never afford to buy MIL out what's the end plan? Either MIL can't get money for the asset or the OP will have to move out so it won't be a forever home? Further to this presumably the rental value of MIL's bigger house is more than the OP's proposed small house so the OP should at least be paying the difference in rent to MIL? Why doesn't MIL sell her big house and buy a smaller one in the normal way? If she wants income for the extra money she could invest the cash leftover separately.

MarkBargain

Can't you draw up a contract to buy the £400K house off her for an agreed lump sum plus instalments over say 30 years? That would allow her to buy a smaller house of her own, would get you the bigger house (legally yours) and it would give her an income for future years.

That's just an idea, obviously seek proper legal advice!

kate020385

laidbackgjr wrote: »

You also need to consider if your MIL isn't living in the property then any value increase will be in scope for Capital Gains Tax.

There are a number of ways to achieve what you want, but none of them are very financially astute or easy to achieve. You'll have difficulty getting a mortgage to pay for the property your MIL will live in rent free, both properties will be in scope for Capital Gains Tax. You'll need to spend money complying with legal landlord requirements each year.

I know! ive suggested just sticking to our budget and buying our own home and letting his mother do as she wishes with hers. But he has his heart set on moving in there! to top it off, he starts a new job up there in may so we need to get moving!! I cant see how we are going to achive it! Thats why i come and see if any of you nice folks had any soloutions we hadnt thought of?

kate020385

MarkBargain wrote: »

Can't you draw up a contract to buy the £400K house off her for an agreed lump sum plus instalments over say 30 years? That would allow her to buy a smaller house of her own, would get you the bigger house (legally yours) and it would give her an income for future years.

That's just an idea, obviously seek proper legal advice!

ooooooooo!!!!!!!!! I like!!!!!

MarkBargain

kate020385 wrote: »

ooooooooo!!!!!!!!! I like!!!!!

It would seem to be a way to keep it all in the family, avoiding complicated ownership models, mortgage arrangements and bank interest charges.

franklee

kate020385 wrote: »

pixie 5740 Yes we thought of this too but she says she doesnt want to sell it because while she still has the house it is increasing in value and making her money but if she sells she will end up living off the profits which will obviously leave her with less and less money over time. she is on 53 so still a long time to live of the profits, im not sure the money would go very far. I can see her reasoning but on the flip side, its not as if shes going to come and sell the house from under us as a retirement fund as we would build this into a contract to avoid either of us from kicking the other out. problem with that us onbviously if she owns the house she can kick us out if she likes just like we would be able to do the same with her. This is what worries me about the situation. Im not sure if such a contract can be agreed legally???

You could be given a life interest in the property to live rent free. But this would devalue the property hugely and then how would MIL get hold of her retirement money with you living there rent free?

Pixie5740

kate020385 wrote: »

This is what worries me about this plan! you can gift a house and after 7years if it has not been needed for this reason then after that 7 yrs it can no longer be touched. but that involves her giving us the house which would make it no longer hers. this takes us back to the issue of her having no assets and no money!

Are you sure about that? Are you perhaps confusing IHT with deprivation of assets for avoiding care home fees?

I quite like MarkBargain's suggestion so try and see if that's a viable option.