Selling a percentage of our home to our son

Diver

Badger_Lady wrote: »

I'd be concerned about the clause "Any party could require the others to use best endeavours to sell the property at the market value within 1 year from notice." though - I thought you wanted to stay in the property? Isn't there a reasonably high risk that your son might want to withdraw his equity and buy elsewhere in the future?

We are a close family and don't have any history of falling out yet I was trying to think of this in the terms of "what would happen if there were a disagreement on when to sell" The one year was my idea because that is the notice he has to give to quit the army and seemed very reasonable for all.

lynzpower

What bothers me about this plan is that "would any lender lend to him on these terms"

if he defaulted ( and stranger things have happened) then how could the lender take posession?

Diver

Badger_Lady wrote: »

I'd also look into whether your son could be liable to Capital Gains tax for his portion, since he would not be living in the property - the venture might not be as wise as he thinks.

As I understand it the family home is considered his residence as it is the only residential address he has in the UK. Good point though. Any suggestions where I could check this out?

nobblyned

I still don't quite understand from your point of view. You don't want to leave your house, yet if you sell a proportion to your son, isn't that exactly what will happen an a few year's time?

Or by that time will you be happy to leave? Is there another way out of your debt problem that wouldn't force you down this irreversible path?

Diver

Badger_Lady wrote: »

If your son is not planning to charge you rent, he would almost certainly be better off buying a small flat to let out (doesn't have to be nearby - he can choose an up-and-coming area).

Neither of us have considered rent and we have never asked any of our children for housekeeping contribution. He is dead against any buy to let. A number of his colleagues have had bad experiences.

Badger_Lady

I understand your angle, Diver, and can see that it might be better than his original idea. But that doesn't make it the best. Let's compare the advantages of each option:

Buy with Friend - Be on property ladder, Live in 5 weeks a year, Help pay off Dad's debt
Invest in parents - Be on property ladder, Sell up when required
Buy to Let - Be on property ladder, Get rental income, Sell up when required

I've put the rental income in red cos it's kind of a biggy - if you're looking at, for example, a 20-year investment in property, then £400 popped into his savings account every month is going to be a nice security for his future!

I realise you've said that "for various reasons he's not interested in buy to let" - what are his reasons? Sorry, I just can't think what they could be!

BettiePage

Diver wrote: »

I may have confused this by not explaining clearly enough.:o

A financial pitfall of being a career soldier is that whilst it is easy and financially sensible to utilise army property to live in, at the end of a career soldiers often find themselves unable to afford purchase of a home. One option is to try to get onto the property ladder at an early stage.

I'm married to someone in the RAF, but thanks for your views anyway.

Coupon-mad

Sorry it's not related to your last question as I don't know the answer to that, but what about your other 3 children's inheritance?

The possible falling-out could come from one of them if they feel that your son would get a bigger share of the family home they they will when you eventually pass on. Don't underestimate how they all might feel about this later on, I see they must be teenagers now but the repercussions later will be huge.

Presumably you would put in both your wills how the % that you own would be distributed upon both of your deaths (would your son get a part of that % or not?).

Sorry to ask but what if the worst happened in say, 2 years time, how would the other siblings get their inheritance if he was not able to buy them out and didn't want to sell either?

You may have thought all this through but your other children need to know what is being discussed so they can all raise any worries now, rather than fall out about it later. No-one wants to think about inheritances but TBH if the other members of the family feel any arrangement is unfair they won't be able to stop thinking about it....that's when bad feelings and fallings-out happen, I have seen it in my own extended family.

Diver

Badger_Lady wrote: »

Is there an another motive for this proposal? Are you struggling with money?

It’s not so much struggling with money more a case of adjusting my circumstances so my wife and I can do more of what we want.

BettiePage

Diver wrote: »

It’s not so much struggling with money more a case of adjusting my circumstances so my wife and I can do more of what we want.

Can you please type in a bigger font?