Remortgaging to help the in-laws - your assistance please!

batvink

Hi all,

can anyone advise me on the implications of this scenario?

Theplan is to "remortgage" our home to release £30,000. With this we "buy" a £30,000 share of the in-laws house to give them cash to go on holidays etc.

Their monthly pension income covers all of their bills, plus the mortgage repayments on our new remortgage, which they pay as "rent" on our share of the property' leaving them with £30K to be a little more adventurous in the twilight years.

I know there will be "issues" and the tax man will see opportunities, does anyone know what they might be?

Thanks in advance!

silvercar

Post on the tax board, there are some ex tax inspectors there who will give you an opinion.

I would be phrasing it that you are investing in your in-laws home and they are paying rent. The rent would be an income to be declared but the mortgage interest (as you took out the mortgage for the sole purpose of investing in their property) would be an allowable expense.

There could be CGT risks when the property is eventually sold, as it was never your residence.

Leon_W

I don't know how old your in-laws are or their situation, but be aware that having "savings" over a certain threshold can have an effect on entitlement to benefits.

Conrad

Make sure you have a watertight legal agreement. There are examples of such lending where the relatives have split up, or 1 dies and the other meets a new partner and on death the 'outsider' inherits the £30k!