Buying a second property for my parents to live in

KateRose2020

Hi there - I currently own the property I live in mortgage-free. I am in the position to be able to buy outright, a second property for the sole purpose of housing my elderly parents. I wouldn't expect any rent from them. I would plan to sell the property in future years when my parents are no longer with us. Are there any tax implications that I need to consider apart from CGT upon eventual sale of the property? 
Thanks!

princeofpounds

Not really, if you're not charging rent and your parents are paying the council tax. Worth considering what happens if you pre-decease your parent perhaps.

SDLT_Geek

You will need to allow for the extra 3% SDLT on buying the property.

oldbikebloke

KateRose2020 said:

Are there any tax implications that I need to consider apart from CGT upon eventual sale of the property? 
Thanks!

nope, as mentioned:
CGT on sale
additional rate SDLT on purchase

allowing parents to occupy rent free a property you own has no further tax implications since (obviously) you fall within CGT and your parents have no financial stake in the arrangement, so there is no question of inheritance tax (GWR) or them paying for, but not owning, a property they live in (POAT)

Mickey666

Would it be better to gift the money to parents, they buy house as their main residence, leaving it to OP in their will, no additional SDLT to pay, no CGT to pay on disposal and (presumably) no IHT on second death and all assets returned to OP.

bolwin1

Mickey666 said:

Would it be better to gift the money to parents, they buy house as their main residence, leaving it to OP in their will, no additional SDLT to pay, no CGT to pay on disposal and (presumably) no IHT on second death and all assets returned to OP.

On the flip side, if the parent that lived the longest ended up in a care home, the house would have to be sold to pay for funds (after any savings). 

xylophone

Lend your parents the money to pay for the property against a first charge on it - you can make the loan interest free and repayable when neither wishes to live there any more.
See a solicitor to discuss and arrange formal loan agreement etc.

Slithery

Mickey666 said:

Would it be better to gift the money to parents, they buy house as their main residence, leaving it to OP in their will, no additional SDLT to pay, no CGT to pay on disposal and (presumably) no IHT on second death and all assets returned to OP.

I posted the exact same thing and then quickly deleted it when I realised that if the parents need care the home may need to be sold to fund it without the OP getting any money back.

Mutton_Geoff

I am in a similar position but to help a sibling. I'm trying to work out the most tax efficient and financially secure way to do this as I'd want to protect my investment. I was thinking of an interest free gift with a charge on the property for 100% of it's share on disposal.

oldbikebloke

Mutton_Geoff said:

I am in a similar position but to help a sibling. I'm trying to work out the most tax efficient and financially secure way to do this as I'd want to protect my investment. I was thinking of an interest free gift with a charge on the property for 100% of it's share on disposal.

then it is not a gift, it is a loan

[Deleted User]

Parents buy home in their name with 100% secured private mortgage by yourself