Tenants in common with Mum, lots of questions.

PrinnyPree

Well this might be a little bit backwards from usual parent child tennants in common.

I want to help my Mum afford to buy the house she wants so she can live near me when my baby is born. (She currently lives 100 miles away) It was her idea to move closer as her other grandchildren are growing up and my other sibling who lives close is moving a bit further away.

However the area I live is slightly more expensive, and to get a comparable house to the one she will be selling I was wondering if I could buy a stake in it. She l's 75 and morgage free, I have a small mortgage left due to big overpayments whilst both working and child free but will be getting some inheritance soon so instead of completely paying off the last of my mortgage was wondering if I could put 10% (£35k) towards my Mums house so there's a 10-90 split tennants in common (her 90% coming from the sale of her house). My Mum will live there as her main residence I won't be charging rent on the 10% or anything awful like that, just a win win (I hope) of Mum being able to afford the house she likes and I have a 10% stake as an investment in many decades time if my Mum passes, or if before, she decides to sell and downsize and give me the 10% back. I have 2 siblings if that's relevant. Although I don't think they will be negatively effected inheritance wise with this arrangement? 

My main question is because I already own a house with my husband will I be subject to any sort of tax or payments as this will be considered a second home on our part? Is this complicated to arrange and legal? Any advice would be hugely appreciated. 

TIA for reading.

davidmcn

Would be simpler to just lend her the money? If you're an owner then the whole price will be subject to the additional rate of SDLT (or LTT) as its a second property for you. 

PrinnyPree

davidmcn said:

Would be simpler to just lend her the money? If you're an owner then the whole price will be subject to the additional rate of SDLT (or LTT) as its a second property for you. 

Ah well this is what I wanted to know, I can't seem to find any info online of how this works say if a house is £350k I put in £35k mum puts in £315k would the stamp duty be worked out as £18k as a second home instead of £7.5k notmal? That definitely puts a different spin on things.

xylophone

It would be much simpler to lend your mother the money and take a first charge against the property as your security.
See a solicitor about a formal loan agreement and registering first charge at the Land Registry.

oldbikebloke

PrinnyPree said:

davidmcn said:

Would be simpler to just lend her the money? If you're an owner then the whole price will be subject to the additional rate of SDLT (or LTT) as its a second property for you. 

Ah well this is what I wanted to know, I can't seem to find any info online of how this works say if a house is £350k I put in £35k mum puts in £315k would the stamp duty be worked out as £18k as a second home instead of £7.5k notmal? That definitely puts a different spin on things.

whilst a loan and charge would be simpler, higher rate SDLT does not apply (assuming you are in England  - different rules other places) because your share would cost (be worth) less than £40,000 
https://www.gov.uk/hmrc-internal-manuals/stamp-duty-land-tax-manual/sdltm09780

PrinnyPree

oldbikebloke said:

PrinnyPree said:

davidmcn said:

Would be simpler to just lend her the money? If you're an owner then the whole price will be subject to the additional rate of SDLT (or LTT) as its a second property for you. 

Ah well this is what I wanted to know, I can't seem to find any info online of how this works say if a house is £350k I put in £35k mum puts in £315k would the stamp duty be worked out as £18k as a second home instead of £7.5k notmal? That definitely puts a different spin on things.

whilst a loan and charge would be simpler, higher rate SDLT does not apply (assuming you are in England  - different rules other places) because your share would cost (be worth) less than £40,000 

Oh well that makes it a possibility again  I'd feel some how morally wrong lending my mum money with interest. I wouldn't be interested in collecting in her lifetime and I think it might look shady in my siblings eyes when I came to collect out of the inheritence in the distant future.  Part investing in property seems neater morally even though maybe slightly complicated legally. 

As for not having to pay stamp for my portion I'm assuming my Mum would still have to pay normal stamp on the full 350k not just her 315k portion?

[Deleted User]

PrinnyPree said:

Oh well that makes it a possibility again  I'd feel some how morally wrong lending my mum money with interest. I wouldn't be interested in collecting in her lifetime and I think it might look shady in my siblings eyes when I came to collect out of the inheritence in the distant future.  Part investing in property seems neater morally even though maybe slightly complicated legally. 

As for not having to pay stamp for my portion I'm assuming my Mum would still have to pay normal stamp on the full 350k not just her 315k portion?

You don't have to charge your mum interest on the loan.

Mojisola

Lover_of_Lycra said:

You don't have to charge your mum interest on the loan.

This ^

When the house is sold, your agreement can say that you get back what you put in (although it will be worth less by then) or have 10% of the value of the house (again, that value could drop).

Slithery

PrinnyPree said:
I'd feel some how morally wrong lending my mum money with interest.

Who said anything about charging interest?

Mojisola

PrinnyPree said:

I wouldn't be interested in collecting in her lifetime and I think it might look shady in my siblings eyes when I came to collect out of the inheritence in the distant future. 

You could suggest to your siblings that you each loan your mother equal shares of the money she needs for the new house - you'll all get back what you put in when the house is eventually sold.

PrinnyPree

Lover_of_Lycra said:

PrinnyPree said:

Oh well that makes it a possibility again  I'd feel some how morally wrong lending my mum money with interest. I wouldn't be interested in collecting in her lifetime and I think it might look shady in my siblings eyes when I came to collect out of the inheritence in the distant future.  Part investing in property seems neater morally even though maybe slightly complicated legally. 

As for not having to pay stamp for my portion I'm assuming my Mum would still have to pay normal stamp on the full 350k not just her 315k portion?

You don't have to charge your mum interest on the loan.

I'd still be paying interest on my mortgage which I could wipe without giving the loan,  also its to get my Mum a nicer house its not that she can't get a house without my help and moving is her idea. If I lend my Mum the 35k for 20+ years no interest that could have been invested in my pension or my own house, the 10 90 split is a mutually beneficial one. An interest free loan would put me at a loss. X