Buying my Mum's house

advice47

Hi, hoping for some advice please. I would like to sell my house, and buy my Mum's house, which I would then live in with my children and my Mum. My Mum is 78 years old and I hate the idea of her being alone in the house. I would not be able to pay market value, I can afford £140,000, the market value is £180,000. I have 2 sisters and the house is our inheritance. My Mum and both sisters are happy for me to buy at £140,000, neither of my sisters wish to live there. We were thinking of splitting the money 4 ways, (us 3 and my Mum), so our thought process is, take my £35,000 split of the money and use it as a sort of 'deposit', therefore only needing to pay my Mum £105,000, which they will then split between the 3 of them (£35,000 each). Is this allowed, possible??? Any advice will be greatly appreciated. We will seek formal advice but just wanted to have a bit more of an idea in my head first. Thanks

silvercar

I can see family headaches over this in the future, but that aside.....

As far as lenders are concerned, you are buying at market value (180) with a gifted deposit of 40+35=75, leaving 105. So you get a mortgage of 105 and pay that to mum, she keeps 35 and gives 35 to each of your sisters.   

DE_612183

you will also need to check inheritance tax as the £40k and £35 will be seen as gifts - not sure what the rules are and whether it will make any difference - someone will come along shortly and tell you.

Keep_pedalling

DE_612183 said:

you will also need to check inheritance tax as the £40k and £35 will be seen as gifts - not sure what the rules are and whether it will make any difference - someone will come along shortly and tell you.

The big problem here is not IHT but deliberate deprivation of assets if at anytime in the future she needs residential care. Inheritances are never guaranteed as assets may be needed by the OPs mother for herself.

The other issue is her security, what happens if the OP runs into financial difficulty, gets involved with an expensive divorce or dies before their mother. 

Bigphil1474

The inheritance tax effect kicks in if the gifter dies within 7 years of the gift. If that happens, the gifted amount is included in the estate of the deceased. Probably not going to be an issue as the allowance is in the region of £330k, and is increased if the property goes to children. 

As above, there may be questions asked if your mum requires residential care as they will look at what has happened to any assets she had before deciding on any contribution. 

Plus, you are basically getting £75k from your mum, which is more than your 2 sisters - if they are happy with that, then fair enough.

turnitround

As others have said, what happens if your mother needs to go into care in 5 year's time? Are you and your sisters going to be able to pay the care fees because your mother will be assessed as if she still had the house.

silvercar

 future care needs and deprivation of assets is only a concern if it could reasonably have been foreseen at the time. 

ACG

It sounds like your sisters are being done over to me.
Its valued at £180k. 
Split 4 ways is £45k each. 

You have a discount on the property of £40k so you raise a mortgage of £140k.
£45k goes to sister 1
£45k goes to sister 2
£45k goes to mum
£5k goes to you... or you raise £135k. 

Otherwise you are in essence getting twice as much as everyone. 

But there are all sorts of issues:
Deprivation of assets,
What happens if the property goes up or down in value, are you/your sisters ok with that?
What happens if mum needs care? Who pays for it or is it all going to dumped on you? 

Not really nice conversations but better to be had now than when the times comes.