Advice please Renting to parents

creditcard123

Which country is your property in? 
> We also need to decide where money from proceeds of sale are going as parents want it put away as inheritance but I do not think it is as easy as that. 

What do you mean it's not as easy as that?? Put it in a bank, box or under the mattress, there's no tax to be paid on it. 

Scotland

My parents don’t want it in their names as do not want to touch it.

Comms69

creditcard123 said:

Thank you for all your comments
I have spoke with bank about our mortgage and as long as we are not applying for New mortgage deal (our discounted rate ended in June currently on variable rate) we can stay as we are.
The easiest solution for us is for my parents to pay a monthly rent but as they have never paid rent or a mortgage they do not want to do this.
My parents chose my two eldest sisters as POA I am the youngest.
If I work out the lower rate of rent for area and pay off our existing mortgage then the rent would be paid for 4 and a half years, so I would be forfeiting my inheritance for rental income which I would be taxed on which we expected to be anyway. I think this would be way my siblings would view this and I am ok with this, I just don’t want to be out of pocket for property, I do not care about inheritance.

im confused why do you think you'd be taxed beyond what they've already used up? 

Comms69

creditcard123 said:

Which country is your property in? 
> We also need to decide where money from proceeds of sale are going as parents want it put away as inheritance but I do not think it is as easy as that. 

What do you mean it's not as easy as that?? Put it in a bank, box or under the mattress, there's no tax to be paid on it. 

Scotland

My parents don’t want it in their names as do not want to touch it.

so what do they want to do with it?? Sorry im confused - if they want to give it away they can, just it could / would be seen as deprivation of capital and cause issues in terms of ongoing care in a care home for example; and potentially inheritance tax

creditcard123

I didn’t think you could just give large sums of cash away. When we gave our children £10000 we spilt it over 2 tax years so they wouldn’t pay tax on it as gifts to children was only £5000 per year. Unless this has changed or we have misunderstood.

Slithery

There is no tax due on gifts in the UK.

Comms69

creditcard123 said:

I didn’t think you could just give large sums of cash away. When we gave our children £10000 we spilt it over 2 tax years so they wouldn’t pay tax on it as gifts to children was only £5000 per year. Unless this has changed or we have misunderstood.

Where did you get that idea from??

There is no gift tax in the UK. AFAIK there never was

creditcard123

Oh well that’s great news then. That is what I have been thinking this whole time which is why I didn’t know how to take the money from parents. Have just searched and I seem to have got it from the inheritance tax section on wedding gift of up to £5000 for own child. This has cleared everything up. 

Thanks you everyone 

Comms69

creditcard123 said:

Oh well that’s great news then. That is what I have been thinking this whole time which is why I didn’t know how to take the money from parents. Have just searched and I seem to have got it from the inheritance tax section on wedding gift of up to £5000 for own child. This has cleared everything up. 

Thanks you everyone 

Ye those are inheritance tax exemptions.  

xylophone

The proceeds of the sale of your parents' home should be paid into an account in their name.

An NS&I Income Bonds/ Direct Saver could be suitable initially. 

I wonder would it be possible for your parents to lend you enough of the sale proceeds to pay off your BTL mortgage, against a first charge on the property and in consideration of living rent free for five years, after which the loan would be considered repaid and the charge removed?

They would still have the balance of the proceeds  (it might be worth looking into opening stocks and shares ISAs for each of them?) and could pay you a  modest rent after that time if you agreed?