Building bungalow for relative on my land

lingwood

Thanks annisle it looks like I thought that maybe we should split things off now. And knowing xyz costs land, bungalow build, and then if / it needs to be sold, xyz can be reclaimed to the relevant parties with any future price increase.

This then as others have said for the present, keeps the main house mortgage free of issues?

DTDfanBoy

It may not solve your mortgage issues, lenders are often reluctant for you to sell off a part of the property

lingwood

Ok I will contact my mortgage company to discus.

The "selling off" of that bungalow bit of land might be off set by the fact that we bought about the same size bit of land from the adjoining farmer to allow the last extension to be built (13m long single story)

Although this bit of land is not currently packed with the mainland, we would do that we ever sold

eddddy

Another consideration... If you split the titles - and retain (part) ownership of the bungalow - you will probably be liable for capital gains tax on your future gains on the bungalow, as it is no longer part of your primary residence.

xylophone

Sell the land to your MIL - she pays for the building of the bungalow.

You work out the cost of the internal fittings and your labour - you lend her the money for this and she repays you, with interest if required?

lingwood

xylophone wrote: »

Sell the land to your MIL - she pays for the building of the bungalow.

You work out the cost of the internal fittings and your labour - you lend her the money for this and she repays you, with interest if required?

Mil can not afford to buy land at going rate unless you are suggesting a special rate?

lingwood

eddddy wrote: »

Another consideration... If you split the titles - and retain (part) ownership of the bungalow - you will probably be liable for capital gains tax on your future gains on the bungalow, as it is no longer part of your primary residence.

I have spoken to my solicitor and he said can be straight forward "declaration of trust" which will protect both sides and allow sale if required in future taking land and build cost as their own % and then mirroring this for any potential uplift on sale.

Advises split off land now

xylophone

A private mortgage arrangement - you take on the role of the building society?

Your MIL makes a down payment and repays you over a number of years?

Annie1960

Also consider deprivation of assets issue if MIL will be funding some/all of the build but not owning it. I'm not sure if this is what you had in mind, but worth considering.