Advice on buying parents house off them for less than its worth!

bobins

Hi There, we are after some advice regarding me buying my parents house off them for alot less than it is really worth.. The legal implications of it all and the tax costs..

The house is worth around 250k, my parents would be looking to move house and sell me theirs for whatever I could get a mortgage for say £120k..

Would this have to be declared as a gift or can they sell their house for however much they want, even to family?

Now say I bought it for 120k, they would have 100k or so still tied up in the property so that when I ever decided to sell-up, they could have the rest of the cash (minus whatever Its gone up since I buy it)

What would be involved in this sort of arrangement?

Many Thanks,

the_boy_with_no_name

i bought my in-laws house off them for £30,000 less than it was worth. they can sell it for whatever it os worth, aslong as it is enough to pay their morgtage off (if they have 1).

as for the 100k tied up in it i dont think they would have a claim to it.

Biggie

i've done something similar before buying from family for less then market value.
Perfectly legal though if the lenders get a sniff that it's worth much more
i.e Valuation is said to be 250 rather then 120k then they may insist on Personal Intemity insurance so that if your parents wer'e sued nobody would have a claim to this money.

Also if inland revenue get a sniff they may get a bit funny about as they may see it as avoiding stamp duty.

btw mine went though smoothly but then the valuer just signed it off for the mortgage amount rather then 'market value'

abaxas

Correct me if I'm wrong here.... but...

Couldn't they just 'gift' you the property, and u 'gift' them the money?

Live >7 years. No tax

the_boy_with_no_name

abaxas wrote: »

Correct me if I'm wrong here.... but...

Couldn't they just 'gift' you the property, and u 'gift' them the money?

Live >7 years. No tax

not if the house is going to be morgtages=d.

biggie, our valuer did the same, just gave a figure of morgatge value.

bank knew what it was worth but as we had a 20% deposit they didn't say anything

bobins

thanks for all your comments,

it doesnt sound like a too big issue then.. my dad originally thought that if he did sell to me 100k lesss then it was worth it would be seen as a gift and he would have to pay 40% tax on it.. btw my parents are both 42 so there is a very slim change indeed of either passing away in the next 7 years...

clutton_2

i think you definitely need legal advice - families do split up in the future - and your parents need an independent person to advise them as to their best course of action should this happen.

tyllwyd

If your parents want to be able to potentially access some of the equity in the property in the future, it sounds as if your parents don't actually want to sell it to you outright, they want to sell you about two-thirds and keep one-third. I think you should all consult a solicitor and get a proper agreement drawn up, otherwise it could potentially be a minefield in the future.

Just for example, what if your mum & dad divorced and they wanted to release the equity in your house as part of the divorce settlement, so you were forced to sell up even if you didn't want to? Or if they sold you the whole house with a gentleman's agreement that you would repay them when you sold, but in the meantime you got married and then divorced, and your ex-wife insisted having half of the house, so you would see her walking away with their money.

bobins

I think your right about us needed to seek proper legal advice regarding the issue..

The point about if I got married and divorced and the ex nicked off with my parents money is a worrying one and is enough to realise that proper advice is needed here..

Thanks everyone who has answered, you have all shed some light on this issue..

Cheers