Buying house from spouses family

squarehead94

Keep_pedalling said:

The only immediate tax issue might be CGT if this is not the GP main residence and that would be payable by them and would be based on full market value if sold to a connected person at a discount.

Any discount would be treated as a gift for IHT purposes but again it does not effect you, as any IHT due is payable by estate.

It is his main residence, but what would happen if he didn't leave an estate as such? I know he will have a pension but how much of it left, I am unsure. I wouldn't want to potentially leave his children liable for anything

turnitround

Why on earth would someone of 73 want to go into rented and have to pay out a massive lump every month. Have you also considered that having the capital may affect any benefits he may get. What will happen if he needs to go into care and he has given his capitol to his children?

Brie

Personally I don't think the whole £15k discount is actually a discount.  Given that an estate agent might charge 2+% of the sale he would lose £4250 of £140k charge.  So the discount is closer to £10k.  Isn't he allowed to gift £3k to anyone each year?  So he's given you £3k and the same to your OH so your down to £4k discount.

But I am neither a lawyer or an accountant.

squarehead94

turnitround said:

Why on earth would someone of 73 want to go into rented and have to pay out a massive lump every month. Have you also considered that having the capital may affect any benefits he may get. What will happen if he needs to go into care and he has given his capitol to his children?

To be fair we would be happy to let him live with us rent free, depending on if this is allowed. We are pretty close anyway so this isn't a stumbling block unless lender prevents it for whatever reason (can they?)
He doesn't claim any benefits, he has a good pension from his employer of 40 something years.

eddddy

squarehead94 said:

All I'm worried about is would there be any financial implications or potential scrutinization in me purchasing it for 125k Vs a stranger offering him that? 

In theory, there could be legal issues, if...

• You're coercing him to sell it cheaply to you against his will

• He's insolvent. (e.g. He owes somebody, say, £200k but can't pay it back - so he should sell the house for £140k and give all the money to them, but he's selling the house to you for £125k, to cheat them out of £15k)

• He's avoiding care fees. (e.g. he's selling his house cheaply, meaning he'll run out of money sooner, so the council have to pay more of his care fees.)

But hopefully, none of those apply.

I guess the other issue is if his 2 children are angry that he's sold his house cheaply to you, meaning that they get less inheritance. But that's a family relationship issue, rather than a legal problem.

Brie

turnitround said:

Why on earth would someone of 73 want to go into rented and have to pay out a massive lump every month. Have you also considered that having the capital may affect any benefits he may get. What will happen if he needs to go into care and he has given his capitol to his children?

Maybe he's tired of maintaining a house.  Maybe he wants to move as the house has too many memories that are making him sad living there on his own.  Maybe he wants to travel more and not be tied to one place.

I can't see that he's giving his capital to his children.  He's giving someone a relatively small gift.  He'll have money that he can quite legitimately spend on himself and maybe in 10 years time when he needs serious care he may have very little left and the council will be obliged to help him out.  

As for him living rent free with the OP.....I don't know why it wouldn't be allowed.  Who's going to stop you?  If he's fit and healthy you'll be able to get on with your life while he fends for himself and he'll have some companionship.  Not saying I recommend it much having had MiL move in with us for her last 5 years - it was a lot of work and worry for us.  And she didn't live rent free - I did a calculation of our house hold costs (utlities, tax etc) plus extra to pay for the food and drink she specifically liked and she paid us a monthly amount.  The council had no problems with this when they investigated paying for her care for her last couple of months.  

squarehead94

eddddy said:

squarehead94 said:

All I'm worried about is would there be any financial implications or potential scrutinization in me purchasing it for 125k Vs a stranger offering him that? 

In theory, there could be legal issues, if...

• You're coercing him to sell it cheaply to you against his will

• He's insolvent. (e.g. He owes somebody, say, £200k but can't pay it back - so he should sell the house for £140k and give all the money to them, but he's selling the house to you for £125k, to cheat them out of £15k)

• He's avoiding care fees. (e.g. he's selling his house cheaply, meaning he'll run out of money sooner, so the council have to pay more of his care fees.)

But hopefully, none of those apply.

I guess the other issue is if his 2 children are angry that he's sold his house cheaply to you, meaning that they get less inheritance. But that's a family relationship issue, rather than a legal problem.

Yes thankfully none do apply. He wanted to sell it cheaper initially (prior to getting a valuation done) as he didn't expect it to be worth as much as it was. 
He's not insolvent, he's very stable financially, has no creditors whatsoever.
Again we don't expect him to require care facilities or anything like that. That's why we agreed on the price we did, so it is a saving but a relatively small one. 

Brie said:

turnitround said:

Why on earth would someone of 73 want to go into rented and have to pay out a massive lump every month. Have you also considered that having the capital may affect any benefits he may get. What will happen if he needs to go into care and he has given his capitol to his children?

Maybe he's tired of maintaining a house.  Maybe he wants to move as the house has too many memories that are making him sad living there on his own.  Maybe he wants to travel more and not be tied to one place.

I can't see that he's giving his capital to his children.  He's giving someone a relatively small gift.  He'll have money that he can quite legitimately spend on himself and maybe in 10 years time when he needs serious care he may have very little left and the council will be obliged to help him out.  

As for him living rent free with the OP.....I don't know why it wouldn't be allowed.  Who's going to stop you?  If he's fit and healthy you'll be able to get on with your life while he fends for himself and he'll have some companionship.  Not saying I recommend it much having had MiL move in with us for her last 5 years - it was a lot of work and worry for us.  And she didn't live rent free - I did a calculation of our house hold costs (utlities, tax etc) plus extra to pay for the food and drink she specifically liked and she paid us a monthly amount.  The council had no problems with this when they investigated paying for her care for her last couple of months.  

I think both parties would be happy with him contributing somewhat financially, and if this made life easier especially for potential issues later down the line with investigations for receiving state funded care, I'd be happy to do that. 
We do have a great relationship I think it's more that he is just lonely and as he is getting on it's a somewhat massive house for him to manage on his own, so if he is allowed to he would be much happier staying with us and still having his own life but someone there for when he isn't out and about (which he is anyway to be honest a lot)

Brie

Frankly I think you both have given a lot of consideration to what is being done.  I'd certainly ensure that you both use your own solicitors to ensure there is a documented seller vs buyer relationship.  And keep a record of what is agreed re finances in case you need to refer back to it when discussing things with family or the local council.

What you do need to though is consider how he will live in the house with you and your OH (& children? pets?).  It was easy with my MiL as we were all moving into a "new" house so there was a bedroom & bathroom downstairs that she could have and the same for us upstairs.  There were 2 lounges so we could have privacy, watch whatever TV we wanted etc.  She was pleased we had a cat. 

But for you - will you be taking his best bedroom?  Bringing in your own furniture and disposing of his?  Eating meals together or having separate shelves in the fridge?  Who will own the TV remote????? And what happens if 6 months in you find it's not working.  

squarehead94

Brie said:

Frankly I think you both have given a lot of consideration to what is being done.  I'd certainly ensure that you both use your own solicitors to ensure there is a documented seller vs buyer relationship.  And keep a record of what is agreed re finances in case you need to refer back to it when discussing things with family or the local council.

What you do need to though is consider how he will live in the house with you and your OH (& children? pets?).  It was easy with my MiL as we were all moving into a "new" house so there was a bedroom & bathroom downstairs that she could have and the same for us upstairs.  There were 2 lounges so we could have privacy, watch whatever TV we wanted etc.  She was pleased we had a cat. 

But for you - will you be taking his best bedroom?  Bringing in your own furniture and disposing of his?  Eating meals together or having separate shelves in the fridge?  Who will own the TV remote????? And what happens if 6 months in you find it's not working.  

I did speak to my solicitor, which happens to be the same company as he uses (relatively small town, restricted choice, and I found them to be significantly cheaper for conveyancing than the local alternatives) and they said they had no issues as he has a different solicitor within the branch (and they have a couple of branches anyway)

No kids yet just the dog which he looks after anyway when we go on holidays, nights away etc.

Very fortunate that the property in question has 2 sitting rooms with a door seperating them, so 2 TVs etc. 2 bathrooms also. We do plan on opening the loft up and converting it into a master bedroom with ensuite in the long term so there is a floor seperating. 

But overall he has also stated that should it not work out he is happy to move on, and happy to move on if there is a reason in which the sale would be prevented if he was to stay.

turnitround

Brie said:

turnitround said:

Why on earth would someone of 73 want to go into rented and have to pay out a massive lump every month. Have you also considered that having the capital may affect any benefits he may get. What will happen if he needs to go into care and he has given his capitol to his children?

Maybe he's tired of maintaining a house.  Maybe he wants to move as the house has too many memories that are making him sad living there on his own.  Maybe he wants to travel more and not be tied to one place.

I can't see that he's giving his capital to his children.  He's giving someone a relatively small gift.  He'll have money that he can quite legitimately spend on himself and maybe in 10 years time when he needs serious care he may have very little left and the council will be obliged to help him out.  

As for him living rent free with the OP.....I don't know why it wouldn't be allowed.  Who's going to stop you?  If he's fit and healthy you'll be able to get on with your life while he fends for himself and he'll have some companionship.  Not saying I recommend it much having had MiL move in with us for her last 5 years - it was a lot of work and worry for us.  And she didn't live rent free - I did a calculation of our house hold costs (utlities, tax etc) plus extra to pay for the food and drink she specifically liked and she paid us a monthly amount.  The council had no problems with this when they investigated paying for her care for her last couple of months.  

Squareheads earlier post says he will give most of the sale money to his 2 children.