Loan to Repay Mortgage - Advice Required

Red-Squirrel_2

X-man wrote: »

Mum is 75 years old and is currently fit and healthy. There will obviously be a deterioration in her health as she gets older, that is inevitable. Will she need care and support in years to come? Who knows?

If she does need care, and you and your siblings own what was her only asset (I presume) bought for below market value so she doesn't even have the cash, will you be willing to pay for that care for her?

I'm sorry if I'm assuming the worst of your intentions here, but it seems obvious that it would be in your mum's best interests to maintain ownership of her home. There are no risks at all to her from that scenario, the only risk would be to yours and your siblings potential inheritance.

Sometimes, no matter how insistent somebody is about doing you a favour, the best thing to do is turn them down! Ask her to write a will, that's the best way for her to give you the house.

getmore4less

Nothing medical in the last 10 years?

Giving away your assets but still expecting to use them is depriving yourself of the value of your asset for some reason.

IHT make it clear you still need to include the value if you try to give stuff away but really want full use.

Also you leave yourselves open to CGT issues.

Just buy the £50k worth and become 4 way owners with mum retaining her share.

or use the previous suggestion to avoid all the IHT, deprivation and CGT issue buy at full value with a life interest, leaving your mum with a house to live in and some cash to enjoy the rest of her life.

X-man

IHT will never be an issue as the total value of mums estate will be way below the threshold.

I quite like the idea of buying at full value with a life interest, leaving mum with the house to live in and some cash. The problem I foresee, would be obtaining a suitable mortgage between the three of us. My sister currently has two properties with mortgages and other two have no mortgage.

As none of us would be living in the property, wouldn't we all be liable for CGT when the house is eventually sold?

haras_nosirrah

why not raise the 50k and put a charge on the house for the 50k

mum gets to keep the assett and there is no deprivation of asset issue or potential issues with regard to capital gains, death, divorce, family falling out etc

your money is secured as if the house does need to be sold to fund care then the 50k comes to you first as it is a charge on the house and the 50k will be disregarded from their calculations

makes more sense all round

getmore4less

X-man wrote: »

IHT will never be an issue as the total value of mums estate will be way below the threshold.

I quite like the idea of buying at full value with a life interest, leaving mum with the house to live in and some cash. The problem I foresee, would be obtaining a suitable mortgage between the three of us. My sister currently has two properties with mortgages and other two have no mortgage.

As none of us would be living in the property, wouldn't we all be liable for CGT when the house is eventually sold?

Currenty a life interest gets full PRR for the legal owners.

You could just buy as much as you can raise funds for between you. Debt does not have to be raised on that property if there are others that are owned with room to raise funds.

X-man

What if no property is owned? One of my sisters currently does not own any property. Could she raise money via a mortgage on a property she would ultimately own a percentage of but not live in?