Can we do this?

TheScarletPixie

I'm after some advice please, my son purchased a house for which he has a mortgage and still owes around 50% of the purchase price, he has said that he'd like to sell it to me for just the outstanding balance, it's in a way a gift to me as I'd never be able to afford a house like this but also he's going to inherit it back some day too. He said he doesn't want to make any money off me from the sale. He's happy to do it and so am I as long as it's legal to do so.

I did gift him a 10% deposit when he originally purchased the property. He's currently single with no dependants (not sure if that matters).

Any advice would be gratefully received, thank you.

foxy-stoat

He can sell it to you for as much as he likes, as long as the mortgage is cleared.

Assuming he is years away from needing paid care there wont be an issue with deprivation of assets, unless he is on the verge of going insolvent in the very near future.

[Deleted User]

Yeah it's doable, he gifts you the equity in the property as your deposit and you take over the mortgage.
Not all lenders do these transactions so speak to a broker but as long as you can raise a mortgage it should be fine.

I'm pretty sure they are all done as purchase transactions rather than just a transfer of equity so expect some legal costs

TheScarletPixie

Thank you both for your comments, I'd be buying it from him cash so no mortgage. We're considering it as he wants to buy another property for himself. I don't want to move and as I don't want a mortgage and could clear his outstanding balance it made sense. (I live with my son in his house).

Ozzuk

Just one thought - is he banking on getting it back (if so its not really a gift). If you need care for instance then the house may need to be sold to fund that. Worth keeping in mind.

TheScarletPixie

No he's not banking on getting it back, it would be nice but not essential. He wants to get his own house now and knows it will affect me if I have to move as I don't want to. I'm not refusing btw. It was a thought that as I can afford to clear the mortgage, neither of us is in financial difficulties and ill health etc... currently aren't a problem we don't see why not. As I'm typing this though another thought has popped into my mind, could I not gift him the cash to clear the mortgage and then he adds me to the deeds or would that cause complications?

He wants to make sure I have somewhere nice to live as he flies the nest so to speak.

I want to help him out financially and still have somewhere nice to live.

I would like to try and protect his 'inheritance' if possible which I why I thought him adding me to the deeds and him remaining may be a better idea.

Neither of us are really sure of the legalities so we want to make sure before doing anything.

Thank you.

sal_III

From the perspective future need for care for you and possible IHT. Isn't it much better for you to become tenants in common jointly owning the property.

The downside is he will have to pay extra SDLT on his new home. The upside is both of yours financial interests are protected.

getmore4less

You both living in the place(since it was bought?) helps a lot with some of the complications.

He sells/gifts you the house no CGT his primary residence.

You pay to cover the debt and as much extra he needs.

You have a house you want.

He buys a new place and has a house he wants

His gift sits in his estate for 7 years or just make it a debt.

Seems to be IHT neutral/favourable for you as exchange cash/debt for a house.