Stamp duty on gifted equity?

sharrn

Mojisola wrote: »

Not to do with stamp duty, but do they understand about 'deprivation of capital'?

We have looked into it but as we understand because they are both still working, neither of them are in ill health or looking at going into a care home anytime in the foreseeable future then this should be ok, am I right? They are also signing a letter stating that they will have no interest in the property.

Mojisola

sharrn wrote: »

We have looked into it but as we understand because they are both still working, neither of them are in ill health or looking at going into a care home anytime in the foreseeable future then this should be ok, am I right? They are also signing a letter stating that they will have no interest in the property.

They are giving away £350k - unless they have substantial savings to provide for their later years I can't see them getting means tested benefits in the future.

sharrn

Mojisola wrote: »

They are giving away £350k - unless they have substantial savings to provide for their later years I can't see them getting means tested benefits in the future.

See now this is where I question how much they are technically giving us. Because they are selling us the house for £150,000. Which they are within their rights to do. This pays the remainder of their mortgage and leaves a little bit over for them. Its such a confusing process but the broker and solicitor both say they can't see many problems arising from us doing it this way.

Being 8 months pregnant isn't helping, my brain is on overdrive! :rotfl:

sharrn

Senior_Paper_Monitor wrote: »

Stamp duty will be on the transaction value (not the market value of the property).


Check out 'deprivation' as Mojisola says !!


Where do parents intend to live ?

Thanks, I can't work out if the transaction value is to include what they are gifting us? Im guessing so??

They are looking to move closer to my Gran, where they originally lived who lives 30 miles away. My mum chooses to be her carer and obviously driving there everyday takes its toll. Don't worry we are not just turfing them out lol!:rotfl::rotfl:

kingstreet

In answer to PM;-

SDLT charged on "the consideration" which is £150,000

if the gifted equity wasn't done as it has been, you would need a 100% mortgage and these no longer exist. The lower the amount you are borrowing, the lower the loan to value, the better the rate

deprivation of assets would apply in the event of them needing state-funded care within "the foreseeable future."

Should you require advice, ask your broker as they know your full case details,

Mojisola

sharrn wrote: »

The property is on the market currently for £500,000. My parents will be gifting us £350,000 in equity which is being used as a deposit and we are taking out a mortgage of £150,000 for the remainder.

sharrn wrote: »

See now this is where I question how much they are technically giving us. Because they are selling us the house for £150,000.

It sounds fairly clear. If they sold on the open market they would get around £500k, repay the mortgage and end up with £350k.

As the plans are now, they are giving you the £350k. You will have a house with a small mortgage; they will have nothing.

As someone else asked - where are they planning to live after the house is sold?

Brock_and_Roll

Mojisola wrote: »

They are giving away £350k - unless they have substantial savings to provide for their later years I can't see them getting means tested benefits in the future.

Basically local authorities and other agencies are (quite rightly) working much harder these days to spot deprivation of assets. Nevertheless, as time passes the risk reduces. If the parents were to need means-tested benefits in the next 5 years I would suggest the risk is very high, 5-10 years moderate, 10+ years fairly low. This also depends on where the parents live as some local authorities are much sharper and dig much deeper than others.

Nevertheless, the £350k of gifted equity has not disappeared, so if the parents really want to do this and understand the risk, then they will obviously be comfortable that the OP will return the favour should they ever be denied a place in a care home and face spending their final years on the pavement!

sharrn

Mojisola wrote: »

It sounds fairly clear. If they sold on the open market they would get around £500k, repay the mortgage and end up with £350k.

As the plans are now, they are giving you the £350k. You will have a house with a small mortgage; they will have nothing.

As someone else asked - where are they planning to live after the house is sold?

Okay thanks I think it's stating to make a bit more sense!
They will be moving closer to my gran as my mum is her carer and drives 30miles there and back every day to look after her. When the inevitable eventually does happen, they will move back here and live in one of the bungalows we have on the property ( 2 bungalows one house)

Mojisola

sharrn wrote: »

They will be moving closer to my gran

They aren't expecting to get any help with paying rent or council tax, are they?

getmore4less

sharrn wrote: »

Okay thanks I think it's stating to make a bit more sense!
They will be moving closer to my gran as my mum is her carer and drives 30miles there and back every day to look after her. When the inevitable eventually does happen, they will move back here and live in one of the bungalows we have on the property ( 2 bungalows one house)

Are those bungalows part of the property they are gifting to you?

If yes they need to look at the gifts with reservations and pre owned asset regulations.