Buying from father-in-law - how cheap can we go?

leeee

My wife and I are thinking about buying my father-in-laws investment property, keeping the house in the family.

Can we get the house at a discounted rate or are there tax rules against such a thing? I've read somewhere that it has to be sold at market value and capital gains tax will still have to be paid.

Thanks,

Lee.

MoneyMission2015

I think he can sell it for whatever value he chooses but he would still be taxed on it's true gain. So if he bought for £50k and it was now worth £100k, if you bought it from him for £50k he would still pay CGT on it being worth £100k, so £50k gain.

leeee

Thank you, that's what I thought.

One final question - are there any rules regarding paying back my father-in-law via an agreed loan i.e. we pay him back a fixed amount each month over a 20 year period, similar to a mortgage but without interest?

foxy-stoat

leeee wrote: »

One final question - are there any rules regarding paying back my father-in-law via an agreed loan i.e. we pay him back a fixed amount each month over a 20 year period, similar to a mortgage but without interest?

Just sign an agreement to say your paying him back £X a month over X months. I would not mention this to the lender as they wont see it as a gifted deposit - but he may be asked to confirm that he has no financial interest in the property and the equity is a gift.

Unless he wants a charge on the property - which is what I would ask for if the sums are high enough. It will be an unsecured loan to family - anyone knows that you should only lend to family if you can afford to lose the money.