Buying off parent on the cheap before they flog it cheap

davidmcn

Clendon wrote: »

If I bought the house cash, I would need the 45 grand promised from my mother and my daughter to 'buy' it off me via an approx a 55 grand mortgage. Hence purchase by me for say 150 grand followed by immeadiate purchase by my daughter for 55 grand mortgage ( including 95 grand gifts ). Messy but lots chasing this house! I'm guessing stamp duty paid by me would be at the higher rate but what are the tax implications, would mortgage lenders be difficult for my daughter and would she have to pay stamp duty again.

You should probably start your own thread, but anyway...your daughter won't be able to immediately buy it from you, mortgage lenders generally require the seller to have owned for at least six months. There'd be no stamp duty concession - each transaction would be treated separately.

getmore4less

G_M wrote: »

I did not say inheritance tax would be payable. OP asked specifically about taxes, so I included that possibility.

* if mum survives 7 years - no IHT
* if mum survives 3, or 5 years- reduced IHT
* if mum's estate is below the threshold - no IHT
* if mum bequeaths her estate to spouse - no IHT
* if mum's Executers can show OP paid full value (eg by keeping the Quick Sale valuation, or other valuation) - no IHT

There would be no reduced IHT as the gift is too small even if it was the full house at 250k and IHT on the full estate.

Caz3121

you would have been better starting a new thread...

Why does your daughter not offer the £150k rather than you?
You mention her having a mortgage offer of £160k plus she has £95k gifted deposits....or do you mean she has a £55k mortgage offer to go with the deposit to make a total available for purchase of £160k?

the first difficulty with your plan will likely be finding a mortgage lender until you have owned the property for over 6 months

xylophone

The asking price is £147500.

Grandma is giving £45,000.

You have savings in excess of £100,000 and are prepared to give your daughter £50,000.

Rather than her getting a BS mortgage, why not lend her the amount required over and above the gifts and she can then repay you with interest rather than a Building Society?

You would have a loan agreement drawn up by a solicitor and take a first charge on the property.

bowlhead99

The solution if someone needs to be a cash buyer at £150k, would surely just be to have grandma give the £45k, the mother give £105k, and the daughter then has £150k to buy the property outright in her own name without the mortgage.

Then the daughter can go to her mortgage company and say I own a house outright, I'd like you to give me a residential mortgage secured on it please, for whatever amount (e.g. £55k is only about 35% of the value of the house that it's going to be secured on, and presumably her salary would support a £55k mortgage).

The £55k cash will arrive in her bank account once they've done the mortgage paperwork and she can give her mum back the £55k thousand so she's only had £95k net gifts from the family.

Obviously to protect herself better the mother could give £50k gift and £55k loan (with the loan either secured on the house or not, depending on how much she trusts the daughter's finances) and then when the mortgage company lends the daughter the £55k its on the condition that it's used to pay off the loan so they can take the first and only charge on the property.

Mortgages for first time buyers sometimes come with some sweet deals not available to people getting a mortgage on an existing property they own (e.g. a bit of cashback or some legal paperwork or basic survey or something) and it is cleaner than faffing around and gifting / loaning before and after completion and then mortgaging it. So, you could just take the attitude that you will not be a cash buyer but a 'normal' chain-free first time buyer with a decision in principle for whatever your offer price is, and hope that's good enough.

Or you could just lie and say you are going to be a cash buyer, with proof of funds in your daughter's bank account, and then while you are spending a few weeks doing the surveys and searches and stuff and they've taken it off the market, just cheekily say you have changed your mind and are going to get a mortgage after all. If it doesn't threaten to hold up exchange very much, the seller will probably just tut and say "OK then", rather than going back to the market for another prospective buyer who might just do the same to them anyway.