Buying a second property for my parents to live in

Mutton_Geoff

oldbikebloke said:

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

The (interest free) loan is a gift

getmore4less

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.

That is a beneficial interest in the property so you hit all the same  tax issues as if you owned it.

that loophole got closed years ago.

oldbikebloke

Mutton_Geoff said:

oldbikebloke said:

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

The (interest free) loan is a gift

still not a gift since you expect to make a profit from the sale by taking 100% of the sale value, ie you will be the beneficial owner of the property exposed to the profit or, admittedly, the loss - the latter may be useful for your CGT, the former won't, if you wish to be tax efficient.

you cannot come out of the transaction with any financial gain and expect not to be exposed to tax. 

By all means loan your sibling the money for them to use to buy in their own name. Take a charge against the property to secure your capital from any "issues" your sibling may face during life, and if you do not charge interest then yes, you would be totally tax efficient as you'd have zero tax exposure. 

In the latter sense you would be  🎅 as your brother wins, whilst your capital stands exposed to inflation. (can't find saint emoji)

xylophone

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

See my post above.

xylophone

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.

Lend your brother the money to buy the property and take a first charge.

You can roll up the interest (but would be subject to income tax in the year your received the money) or you could set a repayment on disposal with share of proceeds (likely to be subject to CGT on disposal).

Consult a solicitor and tax accountant.

getmore4less

If you take a beneficial interest in the property you also have SDLT on the purchase as well as CGT assessment on the sale.