2nd home rented to family

likklegem

xylophone wrote: »

Is Dad deferring drawing his FS pension?

If so, has he checked that this is his wisest course of action?

I assume so. He said he was deferring until 62 which would be January next year. State pension isn’t for a few more years yet.

xylophone

State pension isn’t for a few more years yet.

No, but he might like to check the current position (at link above) for planning purposes.

Sea_Shell

likklegem wrote: »

Yeah I’ve got a will. We’ve got two young children so when the second one was born we got one wrote. We’ve since updated it so if I die my 50% share of house is split four ways between my two children and my two sisters. My home automatically goes to husband as per deeds. Husbands will is a mirror one stating the same (he’s got no surviving family).

We’ve not got life insurance tied against that property. I’ve got my works pension and a very basic life insurance which will enable my husband to continue to remain in our home and support our children.

I’ve not heard of a deed of trust.... is this something easy to set up?

My bold - Do you mean your 50% of the house your Dad is living in? Do you not own all of if (abeit with a mortgage)? I thought your Dad gifted you the equity (as deposit)?

Does your will give your Dad the LEGAL right to remain in the property should you pre-decease him? What if anyone bequethed a portion of this house, wants (or needs) to release their equity in it.

Splitting houses this many ways can be very difficult to unpick down the line...and could leave your children in a position where they are no longer first time buyers, with equity tied up in a house they can't access.

xylophone

My bold - Do you mean your 50% of the house your Dad is living in? Do you not own all of if (abeit with a mortgage)? I thought your Dad gifted you the equity (as deposit)

No - from the OP's earlier reply, it seems that her father made her an outright gift of a sum of money which she used as the gifted deposit enabling her and her husband to obtain a mortgage for the balance needed to buy the property her mother and aunt had inherited.

It is not clear how aunt was paid out - perhaps mother bought out her sister.

I'm assuming that there was no tacit agreement for the OP to use the money to buy the house and then let her father live in it (otherwise this would have been a "gift with reservation of benefit"). Or there could be POAT implications.

All that said, the sums involved/size of father's estate may mean that IHT will not be relevant.



I think that this property is now held as legal and beneficial tenants-in-common by the OP and her husband. (post 6).

This means that each party may leave his/her share in his/her will.


If the father predeceases his daughter/has no further use for the property, the plan would be to sell the property and share the proceeds after repaying the mortgage between the OP and her sisters.

There would be capital gains implications for the OP and her spouse and the money given to the sisters would be PETs from the estates of the OP and spouse.

If the OP (or her husband) predecease the father, each has left the share of the property as half to the sisters and half to the OP's children.

It seems that in such an event, there would be enough in an insurance policy for the survivor to redeem the mortgage.

This would still leave the father paying rent but it would (presumably) need to be split between the survivor and the legatees.

.

and could leave your children in a position where they are no longer first time buyers, with equity tied up in a house they can't access.

This would be a possibility.

claire111

Out of interest did you pay 2nd property stamp duty ? The extra 3% ?