Tax problems relating to purchasing a house for my parents

DavidLaGuardia

Some observations not already considered.

1. Ignoring the tax planning matters, there are lenders on this level of loan to value who will lend to pensioners no problem. I am not a mortgage broker so cannot give examples but Halfax were one such company in the past.

a theory:

2. If you want to go along the route of you owning the property, your parents could gift you the 80k and you could then set up an interest in possession trust for them. Under this, the property gets the CGT exemption through their interest. The downside of this method is that the property is chargeable to their estates for Inheritance Tax, but if their estates including the property (less loan) are unlikely to exceed the nil-rate band then this doesn't matter. Furthermore, the property cannot be charged for Nursing home fees as they do not own it.
EdInvetor rightly rasies the issue of deprivation of assets (above) but where there
Chargeable Lifetime Transfer on your estate which would affect you if only if you made any other gifts in the next seven years as gifts in excess of the nil rate band have an immediate tax if during this seven years you made an outright Gift elsewhere (a Potnetially Exmept transfer or PET) and you died within seven years after that event (so it could in theory affect your estate if you died up to a maximum of 14 years less one day if you made the PET 6 years and 364 days after you set a trust up).

Experts feel free to blow holes.

DavidLaGuardia

jimmo wrote: »

DavidLaGuardia
Re post # 14
It’s rather peripheral to the main thrust of the thread but where did you arrive at the concept of a Capital Gains Tax loss from stoozing?
For Capital Gains Tax purposes a chargeable occasion occurs when a chargeable asset is disposed of by a chargeable person.
What do you see as the chargeable asset?
What is the chargeable occasion?

I may have been pushing the boat out a little too far (and could be wrong), but I assumed that a contract of investment is made with the company in this case and that contract has a cash value which the company agree to add interest to. When the money is withdrawn the contract is disposed of and, as it has a cash value, there is a chargeable event on any change not already assesed for income tax. I stand correct if this is not the case, but then it got me thinking as an alternative of why, if there is a 3% charge this couldn't be legitimatly set against income in one's tax return as a cost of earning this income?

gordito

A really big thankyou to everyone - you have given my small, inexperienced brain a lot to contemplate. I have taken it at face value that when my parents told me that they couldn't get a mortgage, they had actually done some research into it. I think I will further investigate the route of them buying a property themselves using a mortgage in their name - it appears that there are lenders out there who will give mortgages to the over 65s.

MarkyMarkD

I think that David's going off on one too, jimmo.

Thanks gordito for the feedback. Glad to be of help!

margaretclare

gordito wrote: »

A really big thankyou to everyone - you have given my small, inexperienced brain a lot to contemplate. I have taken it at face value that when my parents told me that they couldn't get a mortgage, they had actually done some research into it. I think I will further investigate the route of them buying a property themselves using a mortgage in their name - it appears that there are lenders out there who will give mortgages to the over 65s.

Yes, there are.

If we hadn't done equity release to pay off the existing mortgage in 2003, we could have gone on paying it until we were 83. I changed it from interest only to repayment and we were in our 60s then (actually it was in my name only!)

Try Abbey.

The point about retired people, which many lenders appreciate, is that they do have an income, and that income is going to continue for the rest of their lives. They're not going to be at risk of losing their income from redundancy or any of the other things that affect younger people. So from that point of view, provided the pension income is adequate to cover the repayments, being over retirement age need not be a no-no.

HTH

Margaret

DavidLaGuardia

jimmo wrote: »

DavidLaGuardia,
Like MarkyMarkD I think David LaGuardia’s “going off on one” but he could prove us wrong. You really have to do your own research.

Jimmo,

we both went off on a tangent on something minor to do with stoozing (and not part of the main thrust of the thread). However, in so doing you have totally ignored the main points of my original post:

1. The fact that (as repeated by margaretclare above) if they can genuuinely afford to pay rent, they almost certainly CAN get a mortgage if their own right.

2. The alternative proposal I have made regarding trusts etc. which you have not bothered to comment on. I would be grateful if your did as this is relevant to the original question.