Should I buy a house outright for a family member to live in?

00ec25

MountainTop wrote: »

I guess I should have said we wouldn't be 'renting' it out to him. Since we wouldn't have a mortgage it would be for him to live in rent free. We would be hoping the equity value would increase and gain some money on the property that way.

Although I can see that renting to family members can cause problems, one way or another we are going to have to look after him financially, and buying a house seems better than losing money by paying his rent for him.

on that basis

Moral position
obviously providing rent free accommodation for a (close) relative is excellent for both you and him

Your financial position

As an investment
does FIL want to live in the sort of property and in the sort of area that you would choose to buy if you were merely investing for the best guess at future growth?
House? Flat? Up and coming area? Pitty area with prospects? Pitty area without prospects?

Tax
Obviously it would be an investment property for you, so you'd pay Capital Gains Tax when you eventually come to sell it.
However, your CGT would be (very) slightly reduced if, before sale, you physically moved into it and lived there for a (reasonable) time period as your only/main residence.
Is that realistic? Would you buy a property for FIL in an area you'd want to live in yourselves?
If you don't live there, then you are exposed to whatever the CGT rules will be at the point you sell up. Currently they are pay tax on the difference between purchase price and sales prices (less a CGT allowance £11,700 @ 18/19 rate) at 18% and /or 28% tax rate depending on your financial circumstances in the tax year of sale.