Buying parents house

kitkat68

Hi there.
This is my 1st post so please be gentle!
My parents are in their 80s, they own their house, no mortgage is involved. They are wanting to move into a retirement village but to get to the next stage on the waiting list they need to have sold their house and have the cash available in their accounts. This means they need to move into temporary accommodation between selling their house and getting a place in the retirement village.
Now they have lived in their house over 50 years and have never moved. Ideally they would like to move from their house to the.retirement village without the interim move having to happen. I've come up with a solution but wondered if it works and is legally even possible.
I buy their house, they stay in it renting from me, until a place becomes available at the retirement village...once they have moved into their new flat I will empty their house and then sell it....
I'm not wanting to make a profit from this, it's purely a practical solution to avoid them moving twice. In fact it's to avoid me having to move them twice and it will give us more time to sort out their 50 years plus of stuff.... this will be much easier once they have moved!
I am in a good financial position. I don't have a mortgage as my own house has been paid off...I earn good money so have no concerns getting the mortgage....I am a bit worried that I might end up paying CGT....which I want to avoid if possible.. the value of the property is just below the stamp duty threashold...so we won't have to pay that...
I welcome all thoughts....I've never done anything like this...but want to help the folks if I can but I don't want it costing me anything it doesn't need to.
Thanks in advance.

foxy-stoat

You need a regulated Buy to Let mortgage, expect to pay broker fees and Early Repayment Charges - if you sell for around the purchase price and not make a profit then you wont have to worry about capital gains tax. You may struggle to sell it to someone needing a mortgage within 6 months.


Good luck

TBagpuss

Yes, it is possible.

You'd need to talk to a mortgage broker about whether to get aBTL mortgage on your parents home (might be tricky if you were then going to rent to your parents) or whether you could remortgage your own house and find the purchase that way.

You would need to comply with all rukles for landlords (gas safety certificates, ID checks etc)

If the property is worth more when you sell it than when you buy, you will have a potential CGT liability, but that only kicks in if you make a profit, and you do have an annual allowance of about £11K. Also, if you are not trying to make a profit then why worry abouit the fact that if you happen to do so, part of that windfall will go in tax?

Depreivation of assets should not be a problem if you pay market value for the property, although it might be sensible for your paretns to get several market appraisals done so there there is some evidence of the value before the transfer takes place, in case it is ever raised as an issue.

And do make sure that you have a proper tenancy agreement etc in place. It does not sound as though you are likely to fall out with your parents but making sure that all the papework is in order protects you both, particualrly in the event of any unexpected developments .

You would laso have to declare the rent as income and pay income tax on it.

IS the requirement that they do not own a property, or simply that they have £xx is casdh in the bank? If it is the latter, then a simpler option would be for you to lend them then necessary amount, have the loan secured by a charge over their property and have a legal charge setting out the corcumstances in which it is to be repaid. You can agree with your paretns whether this is as a % of the value of the house, for a fixed sum, and whether / how you account for interest.

mrginge

kitkat68 wrote: »

...the value of the property is just below the stamp duty threashold...so we won't have to pay that...

Sure about that ?

kitkat68

Selling it won't cause an issue...we are confident it will sell pretty quickly once on the market...the area they are in is selling very quickly...

teddysmum

How about their moving into a hotel or holiday let (even a luxury care home; some are more like hotels) over the spring (low season), you arrange the sale, then they move to the village. This could well be cheaper,besides providing a pleasant break, than paying two lots of sales fees.

kitkat68

They want to avoid moving twice...dad's had a bad year health wise and isn't able to travel...we live in the Midlands...so no nice holiday let's local...
Would I be able to buy it just with a normal mortgage....and then sell it when the moved...?

Slithery

kitkat68 wrote: »

Would I be able to buy it just with a normal mortgage....and then sell it when the moved...?

Nope. To get a residential mortgage you have to be living in the property yourself.

getmore4less

Remortgage your house so they have the cash to get to the next stage.
Don't bother buying the place just lend them the money repayable when the place is sold.

No landlord situation.

If you qualify an offset may work.

kitkat68

getmore4less wrote: »

Remortgage your house so they have the cash to get to the next stage.
Don't bother buying the place just lend them the money repayable when the place is sold.

No landlord situation.

If you qualify an offset may work.

Don't want to remortgage my house as its jointly owned between my partner and I...I'd have to remortgage 100% of it to get the amount of cash they need...will have to get a BTL mortgage then....

kitkat68

mrginge wrote: »

Sure about that ?

Its been valued at £120k->£130k...so I'd buy it at below £125k to avoid it....well I thought thats where it came in?!