Any Solicitors on here to tell me if this is possible before wasting my time?

Mlyon890

So... heres the score.... 
I have been gifted my parents full house. Just my dad left now. He has another 2 houses and lives comfortably so doesnt need any other income from that house etc. My plan is to remortgage the house upto 75% of the value and use that money to director loan to my property business so then i can use this capital to really take the business to the next level. I will be leaving a pot of cash to the side to cover the remortgage payments and i will be renewing this mortgage deal consistently untill i die i would say. That house wont be going anywhere other than into a trust later if possible. So i am just wanting to know if its possible? Has anyone done anything similar before? I am in scotland so i dont know if theres different regs for up here also that ill need to watch out for? Any help or advice much appreciated.

Cheers. M

Keep_pedalling

Does your father still live in this house? Do you live with him? 

I can see a few problems here, first off if this is still your fathers home you are going to struggle to get a mortgage on it, and assuming this is being done to reduce your father’s estate IHT liability the gift will not fall out of his estate under the 7 year rule as it will be regarded as a gift with reservation of benefit.

Phoenix72

Hopefully your father took legal and taxation advice before gifting the property. 

user1977

This sounds fairly different to your cunning plan of 8 months ago:

Using a 49% share in my fathers house as capital to borrow for buying another flat. — MoneySavingExpert Forum

MWT

user1977 said:

This sounds fairly different to your cunning plan of 8 months ago:

Using a 49% share in my fathers house as capital to borrow for buying another flat. — MoneySavingExpert Forum

Well, you did tell him he couldn't mortgage 49% of the house, so now he has the whole thing...

Mlyon890

user1977 said:

This sounds fairly different to your cunning plan of 8 months ago:

Using a 49% share in my fathers house as capital to borrow for buying another flat. — MoneySavingExpert Forum

Yeah thats it exactly. So do you have any helpful advice or suggestions or just more digs? The plan going forward (if this is at all possible) my dad is retired and has no other income other than a small pension payment plus the state pension so he can potentially be a share holder in my ltd company and receive dividend payments etc in the future as a kind of thanks from me to him for allowing me to do this. We will also be renting out his other house in a seaside town in a serviced accommodation setup through the business etc. there will obviously be a legal doc in place to ensure i cant sell the original family home he gifted to me prior to his death and he can then stay in it with even more peace of mind. 

Mlyon890

Keep_pedalling said:

Does your father still live in this house? Do you live with him? 

I can see a few problems here, first off if this is still your fathers home you are going to struggle to get a mortgage on it, and assuming this is being done to reduce your father’s estate IHT liability the gift will not fall out of his estate under the 7 year rule as it will be regarded as a gift with reservation of benefit.

I do not live with him no. i have my own house and another flat i rent out also. He has another 2 properties that he uses weekly so can live in either of them officially so we have flexibility. this is not being done to reduce Fathers estate. we aren't worried about that at the moment. This is purely an efficient simple way (Hopefully) to equity release from his original house to let me use that capitol to kick start the next stage of my property investment setup. i will be purchasing 2 turn key rentable flats and then a buy to refurb place with the initial amount through the ltd company (hopefully) then take it from there and keep growing the portfolio as quick and efficiently as possible to completely replace my income from my current job. 

housebuyer143

Mlyon890 said:

user1977 said:

This sounds fairly different to your cunning plan of 8 months ago:

Using a 49% share in my fathers house as capital to borrow for buying another flat. — MoneySavingExpert Forum

Yeah thats it exactly. So do you have any helpful advice or suggestions or just more digs? The plan going forward (if this is at all possible) my dad is retired and has no other income other than a small pension payment plus the state pension so he can potentially be a share holder in my ltd company and receive dividend payments etc in the future as a kind of thanks from me to him for allowing me to do this. We will also be renting out his other house in a seaside town in a serviced accommodation setup through the business etc. there will obviously be a legal doc in place to ensure i cant sell the original family home he gifted to me prior to his death and he can then stay in it with even more peace of mind. 

As the other poster says, if it's your dad's home then I think you will have problems remortgaging it because if he dies in the next 7 years I believe or goes into care then the council can come for the house as they can see it as deprivation of assets and you have the IHT liability. 

I'm not sure how a mortgage lender will look at it, but your father will need to sign to say he's no interest in the property but if he's got a contract so he can stay there until he dies, then he can't sign that and they won't lend.

Mlyon890

housebuyer143 said:

Mlyon890 said:

user1977 said:

This sounds fairly different to your cunning plan of 8 months ago:

Using a 49% share in my fathers house as capital to borrow for buying another flat. — MoneySavingExpert Forum

Yeah thats it exactly. So do you have any helpful advice or suggestions or just more digs? The plan going forward (if this is at all possible) my dad is retired and has no other income other than a small pension payment plus the state pension so he can potentially be a share holder in my ltd company and receive dividend payments etc in the future as a kind of thanks from me to him for allowing me to do this. We will also be renting out his other house in a seaside town in a serviced accommodation setup through the business etc. there will obviously be a legal doc in place to ensure i cant sell the original family home he gifted to me prior to his death and he can then stay in it with even more peace of mind. 

As the other poster says, if it's your dad's home then I think you will have problems remortgaging it because if he dies in the next 7 years I believe or goes into care then the council can come for the house as they can see it as deprivation of assets and you have the IHT liability. 

I'm not sure how a mortgage lender will look at it, but your father will need to sign to say he's no interest in the property but if he's got a contract so he can stay there until he dies, then he can't sign that and they won't lend.

Thanks for the reply, 49% of the property was legally transferred to myself more than 7 years ago during the finalizing of my late mothers estate. So i assume this % would not be included in the IHT liability, well hopefully not. He could also pay me market value "rent" so that voids the "7 year rule". then i would just get him that back some way or another through work he would do for me as part of the ltd company so that he is nowhere near out of pocket. 

user1977

Mlyon890 said:

housebuyer143 said:

Mlyon890 said:

user1977 said:

This sounds fairly different to your cunning plan of 8 months ago:

Using a 49% share in my fathers house as capital to borrow for buying another flat. — MoneySavingExpert Forum

Yeah thats it exactly. So do you have any helpful advice or suggestions or just more digs? The plan going forward (if this is at all possible) my dad is retired and has no other income other than a small pension payment plus the state pension so he can potentially be a share holder in my ltd company and receive dividend payments etc in the future as a kind of thanks from me to him for allowing me to do this. We will also be renting out his other house in a seaside town in a serviced accommodation setup through the business etc. there will obviously be a legal doc in place to ensure i cant sell the original family home he gifted to me prior to his death and he can then stay in it with even more peace of mind. 

As the other poster says, if it's your dad's home then I think you will have problems remortgaging it because if he dies in the next 7 years I believe or goes into care then the council can come for the house as they can see it as deprivation of assets and you have the IHT liability. 

I'm not sure how a mortgage lender will look at it, but your father will need to sign to say he's no interest in the property but if he's got a contract so he can stay there until he dies, then he can't sign that and they won't lend.

He could also pay me market value "rent" so that voids the "7 year rule". then i would just get him that back some way or another through work he would do for me as part of the ltd company so that he is nowhere near out of pocket. 

The taxperson will be looking at the net result, you can't dress it up with artificial payments the other way.