Purchasing Parents Home

xylophone

You, your father and your siblings live in Scotland?

Your father's only asset apart from some modest savings is a flat worth £50,000?

Your father is over 65 and has a chronic illness?

You would buy the flat for £33,500 and your father would continue to live in the flat rent free?

Your father proposes sharing the sale proceeds between your siblings?

See link in 6 above.

If you need a mortgage to buy the property, there could be a problem with your father's continuing to live in it.

If you do manage by one means or another to buy the property and your father continues to live in it, what would happen to him if you yourself fell into difficulties and the property had to be sold?

rawbob

thanks for the replies, looks like we are best to leave it now. The intention is not a strip of assets but it would look like one going by the information provided.

just to be clear, I intended to purchase with mortgage of £36,000. 50k minus my share. Then my Dad wanted to live in it until he passed.

xylophone

* Inheritance Tax. The gift of the cash he receives from the sale would fall within the 7 year rule, so would only be tax free if he survives 7+ years. Alternatively, HMRC might consider that what has actually happened is the property was gifted. but as he still lived in it, it would be a 'gift with reservation', so would be taxable on his death (even if beyond 7 years).

If a property worth £50,000 and some modest savings are his only assets ( and considering that there may be some transferable allowance from his late wife's estate), IHT might not be a consideration.

Linton

Does Dad continue to live in what would be your flat? If so, does he pay rent? What happens if you die first or divorce - could he lose his home? Could he live for another 20 years say, time when your investment could gain you nothing but would cost you for maintenance etc?

It seems to me it could be an arrangement that is in no-one's interest except possibly the two other siblings.

G_M

xylophone wrote: »

If a property worth £50,000 and some modest savings are his only assets ( and considering that there may be some transferable allowance from his late wife's estate), IHT might not be a consideration.

Agreed.

Though Capital Gains Tax would apply for the buyer, and the security issue for dad too. What if OP loses job, defaults on mortgage, and it's repossessed.....

xylophone

Though Capital Gains Tax would apply for the buyer, and the security issue for dad too. What if OP loses job, defaults on mortgage, and it's repossessed...

..

Yes, if the son bought the flat and didn't live in it, he would face CGT considerations on sale.


And re Dad's security, yes again - I pose this question in my post above.

getmore4less

You could buy at full market value and give dad a life interest.

That avoids any CGT issues and there are no IHT issues as the estate value is well below £325k

also resolves the security for dad.


obtaining a mortgage may(will?) be a problem.

fairy_lights

rawbob wrote: »

thanks for the replies, looks like we are best to leave it now. The intention is not a strip of assets but it would look like one going by the information provided.

just to be clear, I intended to purchase with mortgage of £36,000. 50k minus my share. Then my Dad wanted to live in it until he passed.

But if the intention is for him to live out his days in the flat then what would be the benefit of you buying it?

tlc678910

Hi,
So you would raise a 36K mortgage and give your brothers half of this money each. You will then pay this mortgage (with interest of course) until your father passes and you are able to access your share. The only bit you are not paying interest on.

You will do this rather than just do nothing and receive the same third of your father's estate (with no inheritance tax as below threshold) when your father passes.

You must really love your brothers!

Tlc