Buyinh home from parents

felicitykindle

If I were to purchase a house from parents at half of the value and inherit he remaining , what is the best method to do this to avoid capital gains.
House was originally a retirement house with intention to move. they have since changed mind and offered for me to live there .
As a gesture I would like to at least cover the costs of building it thus far , and give them something to spend and enjoy .
I plan on taking a mortgage for half the value and then pay that to them,
how do I do this
maybe wrong thread? thank you, F K

davidmcn

First problem is that it would need to be a joint mortgage by you and your parents, you can't just mortgage your half of the house.

G_M

If I were to purchase a house from parents at half of the value and inherit he remaining , what is the best method to do this to avoid capital gains.

Please clarify. Do you mean
* you'll own the entire house, but only pay half what it is worth? If so, what will you inherit later?
* or you'll own the house jointly (50/50?) with your parents, and pay full value for your half?

Very few lenders (if any?) will grant a mortgage to just one of two (or three) joint owners.

What is the rationale for them keeping 50% ownership if

a) you are going to live there and
b) you are going to eventually inherit anyway?

Gifting it to you 100% may reduce the Inheritance Tax on their Estate (assuming they survive 7 years. Or less pro rata).

It would also allow you to sell (if you wished) without any Capital Gains liability for them.

I assume they don't need the money that's tied up in the house (else why keep part-ownership - if that's the intent)?

Where will they live?
What other assets do they have?
How is their health? Care needs? Life expectancy?

AnotherJoe

Its probably easier if they sell you the house at 50% of its value,and you use that "gifted deposit" as your deposit, eg you dont put any money down.

So, say its £100k market value, they sell it to you for £50k, you take out a mortgage for £50k, which is paid to them. So thats you giving them the half you wanted to.

You wont be inheriting anything obviously, you are getting it ahead of that time.
But you wont be paying CGT if you ever sell it since it will be your principal residence.

It will be a gift as far as inheritance tax if they die within the next 7 years. After that, it wont be.

00ec25

felicitykindle wrote: »

House was originally a retirement house with intention to move. they have since changed mind and offered for me to live there .
As a gesture I would like to at least cover the costs of building it thus far ,

please explain what that means

parents paid for the property to be built from scratch?
how long ago was it completed?
have parents ever lived in the property as their own main/only home? If yes for how long have they lived there since it was built. What happened to the place they lived in before the property was built?

potentially it sounds like your parents may be facing a CGT liability of their own if it is not their main home since they have changed their minds about retiring to it?

Tom99

Since you are connected persons your parents CGT bill will be based on open market value not on any price you pay.