Self building, family and retirement!

sashapet

Hi,
Slightly complicated scenario, so bear with me.
My sister and her boyfriend have been gifted a piece of land to build on by his mother. They (a) cannot afford to build on it yet and (b) aren’t sure they want to live there.
My parents have not got a large enough pension, so may end up selling their house to fund their retirement and either downsizing or renting.
How would it work if my parents used some of the money from their house sale, built a new home on the land gifted to my sister & boyfriend, but the resulting house would be co-owned between my sister, boyfriend and my parents (who would just retain a % equal to the amount they invested in the build)? My parents would get to live in a nicer house than they could buy, and my sister and boyfriend get the house built (for future sale or for them to live in when they’re older) without having to find the cash to build it.
Who would have to pay tax and when?

lincroft1710

Just forget this!!

For starters any relationship breakdown or estrangement will cause endless problems

tacpot12

Inheritance Tax may be due on the gift of the land given by his mother if she dies within 7 years of the gift. The tax would be payable by the person who receives the gift. The amount payable reduces over time. As referred to above, if they have both been given the gift, if they separate, things will get messy.

If your parents and your sister and her boyfriend own the newly built property, your parents can leave each of their shares in the property to your sister, her boyfriend, you or the cat's home when they die, which will further complicate things. As will the need to allow the survivor to remain in the house, while they are able to do so. Inheritance tax might be payable depending on the value of the house. It is is due, it will be paid from the estate of the person who has died.

If your parents need to use all the money from the sale of their current house to live off and to build a new property to live in, this means that you will not receive an inheritance from them, or if you do, it will be half their share of your sister's house. It also raises the question of where they live while the new property is built?

Ashworks

I wouldn't even contemplate this. If your sister and boyfriend split up what happens? What if they need the money and want to sell the house your parents are living in? What if when your parents pass away they want to leave you part of their share? It sounds like a recipe for disaster....