Using inheritance to invest

booksurr

Bettythecat wrote: »

How about if he didn't live in it and just stayed in his flat? Would that make it less of a legal minefield?

not really

if you wish to set up a business with 50k of capital invested by you do your brothers make the best business partners that you could have chosen?

your plan as it stands creates a property development business buying, refurbishing and selling on meaning it would be classified as "trading", and so subject to income tax for all 3 of you on your profits (brother living in it does not remove his liability to income tax)

you each own a share of the property so that share is exposed to personal problems as mentioned (divorce, bankruptcy, sudden need of the money for other reasons) meaning how you handle someone needing to sell early is an issue

yes higher rate SDLT would be payable, but so would a ton of other costs which you simply factor into your business plan went deciding if a given property will be profitable or not. You "have trade contacts" so you won't be doing the work, that means you profit is further eroded...

since you wish to be "selfish" and not simply loan the money to your brother (meaning you either get interest or a share of the profit when he sells up) then the most sensible suggestion so far is from foxy stoat - you have your money, he has his.

Sambella

Bettythecat wrote: »

My brothers and I have recently inherited some money (around £50k each)

My little brother is working a zero hours job at the moment and can't get a mortgage (even with the big deposit) he is currently living in a council flat which he hates. He doesn't want to rent privately.

I was thinking about pairing up with my brother to buy a small renovation project house (houses are cheap where we live) in my head it would work like this:

* My brother and I each put xx amount forward into a shared 'pot'
* My partner and I secure a mortgage (we already have a mortgage on our house (80k outstanding) and pay a deposit from the shared pot
* Brother gives up his council flat and lives in the renovation house (he'd have no qualms about that) whilst we do it up, using funds from the shared pot
* Brother pays the amount of rent he currently pays the council each month into the shared pot
* We sell the renovation once complete and repeat until brother is able to secure a better job and buy somewhere

My parents think that there'll be loads of red tape and that it's barmy! I have complete trust in my brother and know that he'd pull his weight.
Do you think it's bonkers or could it work??

It is bonkers.

i would not let my sons do anything like this unless they both had their name on the deeds as joint owners.

I think it's best for your younger brother to invest his money for now.

teddysmum

Are you skilled enough to do a renovation which is of a satisfactory safety standard ? As has been said, bringing in tradesmen erodes your income.


Some 40 years ago, my husband's aunt and uncle used to buy a house to renovate, live in it for a while , then move on to another project. This satisfied their need for change, as well as allowing them to upgrade.


However, they had to stop, because of a legislation change which prevented them from doing this. I don't know what it was, though.

agrinnall

Where would your brother live each time in the period between sale of one property and purchase of the next, having given up his secure council tenancy?