Tax implications of house buying.

Daveinlincoln

Hi all,

I'm not sure if i should cross post this in the tax forum but thought i'd start here.

My Mum is elderly and now wants to downsize.

She has seen a ground floor flat thats empty and she wants to buy it.

Her current house is worth £200k and will sell quickish,her new flat is on sale for £90k so theres a healthy profit there.

The issue is that she wants to buy the flat first and do it up whilst her current property is selling-this makes sense as it'll cut down on hassle and she can just move straight in.

She has £50k in savings so needs another £40k to purchase the flat. I have £20k i can lend her and another family member will lend the other £20k (Granddaughter)...Are there any tax implication doing it this way?

Thanks in advance for any help.

anselld

She will have to pay SDLT surcharge of 3% on the purchase of second home, but she can reclaim that when the other sells so long as it is within 3 years.

So no particular tax issue but you need more funds for SDLT, purchase fees, renovation costs, etc.

AnotherJoe

As said no tax implications as such other than the temporary extra SDLT however make sure these loans are documented so that it's clear it's the relatives money.
I can think of some unlikely events that could cause various institutions to make a claim against that money while it's in the "care" of your mother.
Doesn't have to be a big production, just a simple statement regarding the purpose of the loan, the conditions when it will be repaid (most likely when her house is sold) and get it signed and witnessed.
Unlikely it will be needed but no harm done.