Can we buy parents house outright then let them live in it?

mrginge

I think you are a kind, selfless and wonderful human being.

pinkteapot

TheSilentMeow wrote: »

She won't be gifting it to us, she would just be buying things and paying tradesmen with it, as we are having our house renovated, so it's just her spending her money however she want isn't it?

HMRC and/or your local council may not see it that way.

Ozzuk

TheSilentMeow wrote: »

She won't be gifting it to us, she would just be buying things and paying tradesmen with it, as we are having our house renovated, so it's just her spending her money however she want isn't it?

You could look at it that way, or you could look at it the correct way - this is a gift. The same as what you have spent on her house for her, its a gift. A gift is something you give with no expectation of getting it back.

It would likely be seen as deprivation of assets.

If you do go down this route then maybe it's better she just keeps the extra money for herself/later care? You mention she is struggling, might be nice for her to have realised some capital - better than her selling to one of those equity release companies.

Also, don't forget the stamp duty implications which I believe you'd pay on the full value (3%).

Actually that has raised another thought, but one that takes us off topic a little, how do equity buy back companies get around the deprivation angle? Their model is to buy at reduced value. I guess it becomes the sellers problem.

Guest101

TheSilentMeow wrote: »

OK, over the past few years we have pretty much done everything in her house, new kitchen and bathroom for her as the others were falling apart and she hated them and any time any maintenance needs doing we get it done. We have always paid for everything and reasoned that my husband would inherit the property eventually, but more than that we wanted her to have a nice home and she couldn't afford to maintain it herself! She currently pays £450 a month in mortgage repayments which leaves her very little to live on, she's not the best with her money and this way she would save at least £250 every month to spend however she wants. We would never kick her out! So please don't insinuate that sort of thing. I've come on here for advice thanks, not for lessons in morality. By the way, she wants this more than us, as she trusts us implicitly, and says it will be her way to help us as she's never been able to ever help us financially, not that we've ever asked or wanted her to, but she has always wanted to and is more than happy with the plan.

So you've increased the value of the property by £35,000 ? .... yes thought not.

warby68

MIL might trust you implicitly. Very much doubt the Local Council or HMRC will do the same.

If you start a plan with 'on paper but in reality' clearly the intention is to hide something from somebody somewhere along the line.

Mojisola

TheSilentMeow wrote: »

The mortgage left on his mothers property is £40k, so the £75k will pay that off leaving £35k over, which she will use to pay for renovation work on our property, meaning on paper we will have bought for the full value, but in reality we will have only paid £45k as the rest is essentially being used by us.

TheSilentMeow wrote: »

She won't be gifting it to us, she would just be buying things and paying tradesmen with it, as we are having our house renovated, so it's just her spending her money however she want isn't it?

Some very fluid thinking going on there!

AnotherJoe

This is equity release where the purchaser gets zero equity.

The only problem I foresee is, will a lender let you extend your mortgage? I suspect not unless you lie and say it's for home improvements. It's not illegal or even problematic in the other respect though, since you won't be renting back the property the mortgage is on.

A couple of thoughts,
One, when MILs mortgage payments stop, will she lose housing benefit or other benefits?
Second, if she pays you rent, now you are a landlord and subject to a raft of regulations and tax reporting. I don't know if that goes away if she doesn't pay you rent but maybe helps out with your shopping or similar once in a while. I think it might be less trouble if she doesn't pay you rent. Unless by paying rent she can claim a benefit? But then again if she pays rent to a relative, does that negate HB?

This is not straightforward

ceecee1

What pension does she get (assuming that she is pension age).

If she gets any pension credit it will likely stop as she will not be entitled with the equity from the sale

gingercordial

TheSilentMeow wrote: »

By the way, she wants this more than us, as she trusts us implicitly

OP, what happens if you and your husband divorce? His mother's house will be a marital asset and may need to be sold as part of a split.

Or another scenario: your husband dies suddenly, you inherit the house. You remarry, you die (still within her lifetime) and your new husband inherits the house from you. Now a complete stranger owns your mother-in-law's house. Will he let her stay there?

It might sound far-fetched but these things do happen which is why your mother-in-law should not give up her security. No matter how much she trusts you sometimes circumstances mean trust is irrelevant.

TheSilentMeow

AnotherJoe wrote: »

This is equity release where the purchaser gets zero equity.

The only problem I foresee is, will a lender let you extend your mortgage? I suspect not unless you lie and say it's for home improvements. It's not illegal or even problematic in the other respect though, since you won't be renting back the property the mortgage is on.

A couple of thoughts,
One, when MILs mortgage payments stop, will she lose housing benefit or other benefits?
Second, if she pays you rent, now you are a landlord and subject to a raft of regulations and tax reporting. I don't know if that goes away if she doesn't pay you rent but maybe helps out with your shopping or similar once in a while. I think it might be less trouble if she doesn't pay you rent. Unless by paying rent she can claim a benefit? But then again if she pays rent to a relative, does that negate HB?

This is not straightforward

She would be eligible for housing benefit provided we issued her with a tenancy agreement. We already have another property that we let. I am a member of a landlords association and am very educated in regards to regulations and tax.