Equity release calculation

DullGreyGuy

bluebaron said:

im thinking £1000 a month until death. Obviously who knows? It could be 1, could be 20 years. He will also benefit from the interest from £300k (£15k at 5%) 

Life expectancy of a 75 year old male is 12 years and so you are, on average, proposing to buy a £650,000 house for £444,000. I know what I'd be saying to that offer

How will he be benefiting from interest when you state his plan is to spend and/or gift the monies?

There are many potential complications with later life care, tax, family relationships etc which would benefit from professional help especially if he has kids and your intending to propose a deal with significant benefits to yourself. 

stuhse

Fraught with potential issues as highlighted by others. What if you die before him. What if he lives until 100- and needs care home funding for 5 of them at £1600 per week as our aunt is having to pay . What if he gets married.  If he his happy to leave it to you, invest your £300,000 and use it to pay the inheritance tax when the time comes. ?

user1977

bluebaron said:

user1977 said:

bluebaron said:

Keep_pedalling said:

He would be far wiser to downsize than go with this crazy plan. 

The whole point his he has a small holding with some summer cabins that he rents, that I would like to take over in my retirement. 

Then sort it out with him whenever you retire.

user1977 said:

bluebaron said:

Keep_pedalling said:

He would be far wiser to downsize than go with this crazy plan. 

The whole point his he has a small holding with some summer cabins that he rents, that I would like to take over in my retirement. 

Then sort it out with him whenever you retire.

If I wait until then he will be 90+ and there will be inheritance tax issues. 

But what you're proposing doesn't help with the Inheritance Tax issues, and just adds a whole bunch of extra issues. If he wants you to inherit the property (or to pass it to you whenever he moves out), there are easier ways of sorting it out.

If you want to lend him money in the meantime, you can do that without transferring title to the property.

bluebaron

What would be an easy way for him to sell me the property now and still live in it until his death without me buying it outright and renting it back to him then?
If I wait until he dies inheritance tax will be applied to sale and also he won’t have the benifet of his equity now. 

stuhse

You keep making the assumption he will die before you. Any plan needs to consider the opposite outcome.

stuhse

How long does he intend to keep running the holiday cabin business for ? And if he is too I'll or dies in say 5 years time at 80, who will run it for the ten years until you retire ? I think the more information about you and your uncles position, ideas of how this might work and what you foresee happening the better chance there is of contributors coming up with workable solutions.  At the moment all I see is either huge risk to him and/or huge risk to you.  Does he need your money...how has he managed to get to 75 without it ?

user1977

bluebaron said:

What would be an easy way for him to sell me the property now and still live in it until his death without me buying it outright and renting it back to him then?
If I wait until he dies inheritance tax will be applied to sale and also he won’t have the benifet of his equity now. 

You're missing the point that this isn't going to avoid inheritance tax. Google "gift with reservation".

Like I said, he can have the benefit of your money now - you just need to lend him it. Preferably secured by a charge over the property. Like an equity release lender would.