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Can I buy my parents house

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Batmandy72Batmandy72 Forumite
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My parents currently have a mortgage outstanding on their property. Equity of approx £70k.
They will both be retired soon and we have discussed the option of me paying off the mortgage, making some home improvements and letting them live there. My questions are; am I able to do this, is it an easy process and are there any tax implications?
Thank you

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  • edited 31 July 2017 at 9:48AM
    FermionFermion Forumite
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    edited 31 July 2017 at 9:48AM
    Yes you can do this - we did something similar several years ago with my wife's mother.
    You need to talk to a conveyancing solicitor. Probably the easiest option is to change the title deeds of the property so that you and your parents are "tenants in common" for the property, but set up a "Deed of Trust" such that on the sale of the property 100% of the proceeds goes to you. viz. you become responsible for major property works but they continue to be responsible for day to day services (ie gas, electric and council tax etc).

    A Solicitor would typically charge about £300 for this.

    Obviously you would clear the mortgage as part of the process before registering the new title with the land registry.

    By keeping them as "tenants in common" on the title deeds means that you avoid any issues with HMRC claiming you are receiving rent!

    The only minor potential issue would be IHT limits but no problem so long as one of them lives 7 years.
  • Keep_pedallingKeep_pedalling Forumite
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    If you are doing this with cash no problem, but if you need a mortgage you may struggle to find a lender.

    Unless you are also paying them for the equity they hold in the house they would be very foolish to proceed with this. No one should simply give away their main assets coming up to retirement.
  • Keep_pedallingKeep_pedalling Forumite
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    If you are doing this with cash no problem, but if you need a mortgage you may struggle to find a lender.

    Unless you are also paying them for the equity they hold in the house they would be very foolish to proceed with this. No one should simply give away their main assets coming up to retirement.

    Othing things to consider is stamp duty which will include the addition 3% second home, CGT could also come in at some point in the future. You would also have the responsabilities that go with being a landlord.
  • FermionFermion Forumite
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    Othing things to consider is stamp duty which will include the addition 3% second home, CGT could also come in at some point in the future. You would also have the responsabilities that go with being a landlord.

    Keeping your parents on the title deeds as "Tenants in Common" but with a "Deed of Trust" avoids this
  • LintonLinton Forumite
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    How will you guarantee your parents security? For example what happens if you die first, are involved in an expensive divorce or go bankrupt, or you and they just fall out? What happens if they want to move elsewhere?

    What are they hoping to achieve by selling their home to you? In my view, they would be very foolish to do this. If they need the money and you have some why not give them it covered by a charge on the house?
  • xylophonexylophone Forumite
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    You could lend your parents the money to pay off their mortgage and secure the loan with a first charge on their home.

    This would avoid any "deprivation of assets" question should either of them ever have to go into means tested care.

    The loan could be interest free, interest bearing, (you would report to HMRC) or rolled up - if the latter, there would be tax considerations when the interest was eventually received.
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