Buying a house jointly with parents-in-law

merlinthehappypig

We are currently renting, but considering buying again some time in the next few months because my parents-in-law are elderly and unable to look after themselves any more. They don't want to move into a home, which is understandable, so we are considering buying a house using our money and the money from their sale. Due to their age and possible complications when they die, we were going to buy the house in our name only. The mortgage would probably be about 40% of the purchase price and would be in our name.

We would be putting broadly the same amount of money each into the new house and their entire estate amounts to about £210000, mostly from the house sale, so well under the inheritance tax threshold. My wife is an only child.

Is this as straightforward as we think (other than having to live with in-laws) or can anyone see any tax or other implications?

Apologies if this is in the wrong place, but any advice much appreciated.

ono_no_komachi

Myself and my partner have effectively just done this. My mother is not infirm, but has been living on her own for some years, and had been keen to move to a quiet country location, since the road she was living on was increasingly busy with noisy buses etc. My partner also hankered after a detached place in the country, and suggested (!) pooling our resources and all moving in together.

We were selling two properties, and in the end my mother completed first and moved in with her sister for a number of weeks, so we were part of a chain and she was not. Sounds like it will be other way around for you.

We put in two-thirds (including funding from mortgage) of the purchase price and she put in one-third, so ownership is split equally between the three of us. It did not seem much more complicated than a joint purchase between two parties.

The only thing I can think of which might have a bearing on what you say is this: When we were applying for the mortgage my mother's name had to be included on it as her name would be on the title deeds as being part owner; although only financial details of myself and my partner were required. So you may find your in-laws' details have to be included in the mortgage details even though it will be you and your wife who will be paying it off.

Acc72

Just a couple of considerations :

You would be effectively removing any security your in lawas have - are you / they happy to do this ?

If you and your wife divorced whilst the parents were alive, you would be entitled to half of the property.

You are also assuming that your in laws want to leave evrything to your wife !! - they may want to make other provisions.


Although I am sure this is being thought of with the best intentions, this would leave your in-laws in a very vulnerable position at a time in their lives when they may already be feeling vulnerable.

merlinthehappypig

Thanks to both of you.

To Komachi - we aren't going to have either of my parents in law on the title deeds. The house will just be in the name of myself and my wife, so this shouldn't have a bearing on the mortgage.

Acc72 - appreciate what you are saying, but without going into detail we, and they, have already considered these issues and everyone is o.k. with it - them more than us, to be honest! It's just any other legal/financial implications that I was concerned about.

ono_no_komachi

In which case I guess the money would effectively be a gift from your in-laws to your daughter (or to you both) which you would then use in the purchase? I think there are limits on tax-free gifts of money, but you seem to be saying that Inheritance Tax will not eventually apply anyway. You need someone more knowledgeable than I am on matters of tax, I'm afraid.

Maybe it's a bit head-in-the-sand of me, but if people are contributing to the purchase I would prefer them to be joint owners and deal with issues of inheritance when it becomes necessary. Sorry, that doesn't help you, I know!:o

merlinthehappypig

Thinking about this, then. Is there any reason why my parents in law shouldn't be registered as joint owners if there isn't going to be an issue with inheritance tax as they are under the limit? We were just concerned that it might cause problems when they die.

CLAPTON

I think there is one problem you should consider and that is the issue of what would happen if one or both needed to enter a care home. I'm afraid I not knowledgeable on the matter, but unless they were self funded the council would consider they had 'deliberately' deprived themselves of their money. You should seek more skilled assistance on the matter... how old are they?

Bogof_Babe

Would it be possible to perhaps buy two adjacent houses, semi's or terraced? You could knock through one wall to create access, or if this is a planning permission or structural problem, you could maybe put a small conservatory at the back, linking the two properties so you can get to eachother's homes without having to go "outside".

That way you could keep the financial arrangements separate, while still being effectively in the same place.