Buying a house privately in installments from family

marlow

I'm aware this is probably unusual but wondered if anybody had experienced this or had any expertise in this area.

The intention is to pay £500 per month over the course of around 20 years, apparently though they would have to pay tax on this income even though they wouldn't retain the asset like they would if they were renting.

Just looking for general advice if anyone has any.

Thanks.

G_M

Much more information needed.

booksurr

500x12x20 = £120,000, if that is the purchase price then so be it, they can sell the property to you for any figure they want to

BUT

- they may have to pay capital gain tax on it if it has not always been their main/only home. In that case the value used for CGT is its current market value, which may, or may not, be 120k

- they may have to pay income tax if the property's realistic value is less than 120,000 and therefore the reality is that your 500 repayment is actually a combination of both capital repayment + an interest element. They would be taxed on the interest

- what happens if they need to money sooner? Can you sell easily?

- the debt you owe them would form part of their estate for IHT purposes and would also count if they needed means tested benefits (eg if they go into a care home). If the later applies they need proper legal advice as you may be forced to sell the property in order to repay the debt on demand if the council calls in it when they apply for care

marlow

G_M wrote: »

Much more information needed.

No problem, what info?

marlow

booksurr wrote: »

500x12x20 = £120,000, if that is the purchase price then so be it, they can sell the property to you for any figure they want to

BUT

- they may have to pay capital gain tax on it if it has not always been their main/only home. In that case the value used for CGT is its current market value, which may, or may not, be 120k

- they may have to pay income tax if the property's realistic value is less than 120,000 and therefore the reality is that your 500 repayment is actually a combination of both capital repayment + an interest element. They would be taxed on the interest

- what happens if they need to money sooner? Can you sell easily?

- the debt you owe them would form part of their estate for IHT purposes and would also count if they needed means tested benefits (eg if they go into a care home). If the later applies they need proper legal advice as you may be forced to sell the property in order to repay the debt on demand if the council calls in it when they apply for care

It has been my mums home for the last thirty years. She is now in position with her partner to buy another house outright in cash and that is why its viable for me to purchase it over around 20 years.

We value the house at around £110,000 and were thinking of maybe a 10k deposit. The actual per month payment could be £400-£500, we were thinking around the 18-20 year mark.

Its the legalities that are troubling me, she'd be happy to "gift" it and have the money paid privately in a loan agreement but I'm not sure if that's allowed.

If it has to look like a proper sale how low could the house price go before it looked suspicious?

G_M

off the top of my head:

* current market value
* agreed purchase price
* interest being charged
* whether ownership is to be transferred at start of payment or when payment is completed
* whether a charge would be entered on the property Charges Register
* primary residence of owner if ownership not transferred
* tax status of owner if ownership not transferred
* age, health and employment status of owner/seller
* whether a mortage currently exists, or would/might exist in the future
* content of th owner/seller's will (ie is OP a Beneficiary?)
* any caveats envisaged (eg option to force a sale and/or demand earlier repayment, in part or in whole)
* relationship between the parties


Also to be considered, what would happen if

* either party went bankrupt, lost job
* OP got married, then divorced, and ex claimed property
* either party claimed benefits
* OP died before paying off the debt
* the parties fell out

jamei305

marlow wrote: »

If it has to look like a proper sale how low could the house price go before it looked suspicious?

Suspicious to who? She can sell it to you for whatever price she wants.

xylophone

There is normally no CGT payable on the sale of a principal private residence.

There would seem to be no income tax considerations for your mother as you are paying no interest, only capital.

Is the idea that ownership will be transferred immediately the deposit is paid and your mother would take a legal charge on the property which would be lifted when you had repaid in full?

Would your mother's will "forgive" the debt?

marlow

G_M wrote: »

off the top of my head:

* current market value
* agreed purchase price
* interest being charged
* whether ownership is to be transferred at start of payment or when payment is completed
* whether a charge would be entered on the property Charges Register
* primary residence of owner if ownership not transferred
* tax status of owner if ownership not transferred
* age, health and employment status of owner/seller
* whether a mortage currently exists, or would/might exist in the future
* content of th owner/seller's will (ie is OP a Beneficiary?)
* any caveats envisaged (eg option to force a sale and/or demand earlier repayment, in part or in whole)
* relationship between the parties


Also to be considered, what would happen if

* either party went bankrupt, lost job
* OP got married, then divorced, and ex claimed property
* either party claimed benefits
* OP died before paying off the debt
* the parties fell out

* current market value - 105,000-110,000
* agreed purchase price - 110,000
* interest being charged - No
* whether ownership is to be transferred at start of payment or when payment is completed - start
* whether a charge would be entered on the property Charges Register - not sure what this is sorry
* primary residence of owner if ownership not transferred
* tax status of owner if ownership not transferred
* age, health and employment status of owner/seller - 55, good health, part time
* whether a mortage currently exists, or would/might exist in the future - no mortgage exists
* content of th owner/seller's will (ie is OP a Beneficiary?) - I am a beneficiary
* any caveats envisaged (eg option to force a sale and/or demand earlier repayment, in part or in whole) - nothing envisaged
* relationship between the parties - mother/son, no problems exist

marlow

G_M wrote: »

off the top of my head:

* current market value
* agreed purchase price
* interest being charged
* whether ownership is to be transferred at start of payment or when payment is completed
* whether a charge would be entered on the property Charges Register
* primary residence of owner if ownership not transferred
* tax status of owner if ownership not transferred
* age, health and employment status of owner/seller
* whether a mortage currently exists, or would/might exist in the future
* content of th owner/seller's will (ie is OP a Beneficiary?)
* any caveats envisaged (eg option to force a sale and/or demand earlier repayment, in part or in whole)
* relationship between the parties


Also to be considered, what would happen if

* either party went bankrupt, lost job
* OP got married, then divorced, and ex claimed property
* either party claimed benefits
* OP died before paying off the debt
* the parties fell out

Also to be considered, what would happen if

* either party went bankrupt, lost job -
* OP got married, then divorced, and ex claimed property
* either party claimed benefits
* OP died before paying off the debt
* the parties fell out
Tbh I'm open to suggestions/possibilities for these issues.

Ideally I'd like them to avoid paying tax on the monthly payments so just looking for a way for them to get their money and me to get the house with minimum fuss that is legal and won't have the taxman asking questions.

I know if its gifted then there's the 7 year inheritance tax rule but what happens if its sold for a low amount?

fed_up_and_stressed

marlow wrote: »

just looking for a way for them to get their money and me to get the house with minimum fuss that is legal

Get a mortgage and buy it outright